Para 3.13.5 — MSO (Audit)
Original Rule Text
3.13.5 Under Article 293 of the Constitution, a State may borrow within the territory of India upon the security of the Consolidated Fund of the State within such limits, if any, as may from time to time be fixed by an Act of the Legislature of the State. However, a State may not, without the consent of the Government of India, raise any loan if any part of a loan made to the State by the Government of India is still outstanding or if that Government has guaranteed the repayment of any loan. A State Government may also obtain loans from the Government of India subject to such conditions as may be laid down by or under any law made by Parliament. The Accountants General (A&E) maintain the detailed accounts of such loans and also arrange for payment of the principal and interest whenever due.
What This Means
Under Article 293, State Governments can borrow within India against the security of their Consolidated Fund, within limits set by the State Legislature. However, a State cannot borrow without Central Government consent if it has any outstanding loan from or guaranteed by the Centre. States can also get loans directly from the Government of India under conditions set by Parliament. The Accountants General (A&E) maintain detailed accounts of such loans and arrange for principal and interest payments.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1State borrowing power is under Article 293, limited to within India and against the State's Consolidated Fund
- 2State Legislature may fix borrowing limits
- 3Central Government consent is required if any central loan is outstanding or centrally guaranteed
- 4States can borrow from Government of India under parliamentary conditions
- 5Accountants General (A&E) maintain detailed accounts and arrange principal/interest payments
Practical Example
Rajasthan wants to raise Rs 5,000 crore through market borrowings. Since the state has Rs 20,000 crore in outstanding loans from the Government of India, it must first obtain Central Government consent before approaching the market. The AG (A&E) in Rajasthan maintains the loan register showing all outstanding balances and arranges for quarterly interest payments and annual principal repayments to the Centre through RBI.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why do States need Central Government consent to borrow?▼
Who maintains the detailed loan accounts for State Government borrowings?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.