There is another area where the Modi government has increased the constitutional balance in its favor.
Article 293 (3) provides a state to seek the approval of the Central Government to increase the loan to a state if it is later indebted. In the era of the plan, the state became indebted to the central government as the latter funded them with the plan and small savings loans, rather than allowing them to borrow from the market.
The central government stopped providing loan financing to the states since 2005 and by 2020, the outstanding loans of the states for the central government had decreased significantly, in some states, there were estimated to be central-government debt-free in some years.
The provisions of Article 293 (3) want to prevent states from extremely, so that central loans are not default. States have sufficiently displayed that they borrow more responsibly than the central government, and 3 percent of borrowing borrowing are not more than the prudent limit. Article 293 (3) explained by the Supreme Court is a good case.
In the last 75 years, after India became a republic, states have become strong fiscal institutions. The central government, especially in the last 10 years, has demonstrated a strong tendency to infiltrate the fiscal location of the states and convert them into fiscal place.
It is a high time that we, as a nation, re-configures the fiscal relations of the center-state in all our dimensions-configures taxes-looking at taxes, provision of grant and increasing debt.
(Subhash Chandra Garg is the Chief Policy Advisor, Subhanjali, and the Secretary of East Finance and Economic Affairs, Government of India. He is the author of several books, including ‘$ 10 trillion dream dent, we also make policy, and clarify and comment on budget 2024-25’This is an opinion piece, and above the idea expressed above the author. The Quint Neither endors nor responsible for the same.)
