Question 13GS2GS2

संविधान के अनुच्छेद 293 के तहत राज्यों पर उपार लेने की प्रतिबंध, यद्यपि संवैधानिक रूप से वैध है, केंद्रीय स्वायत्ता को बाधित कर सकते हैं और सहकारी संघवाद को प्रभावित कर सकते हैं। हालांकि परामर्श के आलोक में विभिन्न कीजिए। (उत्तर 250 शब्दों में दीजिए) The restrictions imposed under Article 293 of the Constitution on State borrowing powers, though constitutionally valid, may hinder fiscal autonomy of States and disrupt cooperative federalism. Discuss in the light of recent developments. (Answer in 250 words)

Main Body

The recent dispute under Article 131 where Kerala filed against the Union Government for restricting borrowing under Article 293 speaks to the states' limited fiscal autonomy.

[Article 293] States can only borrow from market of the union government allows → if they do not owe debt to union government, then no permission needed.

Limited fiscal autonomy of states:

1. more prevalent in southern states: with low fertility rates (average of 1.1) thus have huge fiscal burdens.

2. most grants tied to condition, eg: (centrally sponsored schemes)

3. erosion of state distribution – development needs unique across states.

4. Limited pool of resources – less and surcharge and customs not part of divisible pool.

5. A-293 limits market borrowing.

6. GST → limited SGST distribution and eventual phasing out of compensation.

[Deviation of cooperative Federalism]

1. SR Bommai judgment – states not organs of union government, independent units.

2. lack of input from states for discretion of funds.

3. Violative of principle of subsidiarity → development needs not democratized via decentralized autonomy.

Thus, the limited fiscal autonomy leads to tangible fissures in the federal set up of the country.

1Share and surcharge beyond 10% cap. (avoid Panjagnya and Chargagyan)

Way ahead for fiscal autonomy:

5auditing of government debt- outs and revenues- impact based

2The funds to sectors, not schemes.

3Provide liquidity to meet day & day expenses.

4Enforce FRBM – only borrowing for capital expenditure, not for revenue from market.

Thus, cooperative federalism envisages devolution of funds, functions and functionaries (leaving the way) – can states borrow can aid fiscal autonomy and cooperative federalism.

[Diagram/Flow showing:

Way ahead for fiscal autonomy:

Shares and surcharges beyond 10% cap (Srivid, Panjagnya and Chargagyan)

↓

1Share and surcharges

2The funds to sectors, not schemes

3Provide liquidity to meet day & day expenses

4Enforce FRBM – only borrowing for capital expenditure, not for revenue from market

5Auditing of government debt-outs and revenues – impact based]

Thus, cooperative federalism envisages devolution of funds, functions and functionaries (leaving the way) – can states borrow can aid fiscal autonomy and cooperative federalism.

— Bhavika Chopra · AIR 25

354 words12 paragraphs

Conclusion

Thus, the limited fiscal autonomy leads to tangible fissures in the federal set up of the country. Thus, cooperative federalism envisages devolution of funds, functions and functionaries (leaving the way) – can states borrow can aid fiscal autonomy and cooperative federalism.

41 words

Diagram

Flow diagram showing ways ahead for fiscal autonomy including share and surcharges, fund allocation to sectors, liquidity provision, FRBM enforcement, and auditing of government debt

States recognized as independent units (SR Bommai)
Acknowledgement of development needs unique across states

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Topper

Bhavika Chopra

AIR 25

Subject & Paper

GS2GS2

Topic

Centre-State Financial Relations

Federalism

Article 293 - State Borrowing Powers

Writing Stats

395

Total words

Paragraphs

Linked PYQ

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