A) Central Government can borrow outside India upon the security of the consolidated Fund of India within limits fixed by the Parliament
B) State Government can borrow outside India upon the security of Consolidated Fund of State within limits fixed by the Legislature of the State
C) State cannot raise loan without the consent of the Centre, if there is still outstanding any part of loan made to the state by the Centre in respect of which a guarantee has been given by the Centre
D) None of the above
Correct Answer: C
Solution :
[c] Article 293 empowers 'me Centre to impose a ceiling on borrowings by states. Guarantees are contingent liabilities, if not outright borrowings and amenable to central government restrictions. Clause (3) of Article 293 says "A State may not, without the consent of the Government of India, raise any loan if there is still outstanding, any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Government of India or by its predecessor Government. Clause 4 goes on to say, "A consent under clause (3) may be granted, subject to such conditions, if any, as the Government of India may think fit to impose."
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