Article 292 of the Indian Constitution grants the Union government the executive power to borrow money. This power is crucial for the government to meet its financial obligations, fund public expenditure, and manage the national economy.
This constitutional provision lays down the fundamental basis for the Union’s ability to incur debt, while simultaneously subjecting this power to parliamentary oversight, ensuring fiscal responsibility and accountability.
Original Text
292. Borrowing by the Government of India
The executive power of the Union extends to borrowing upon the security of the Consolidated Fund of India within such limits, if any, as may from time to time be fixed by Parliament by law and to the giving of guarantees within such limits, if any, as may be so fixed.
Detailed Explanation
Article 292 deals with the borrowing powers of the Central Government (Union). It explicitly states that the executive power of the Union government encompasses the authority to borrow money. This borrowing is secured upon the Consolidated Fund of India (CFI), which is the principal account of the government where all revenues received, loans raised, and recoveries are credited. By securing the borrowing on the CFI, the government essentially pledges its general revenues and assets held within this fund as collateral or assurance for repayment.
Furthermore, the article also includes the power of the Union executive to give guarantees. This refers to the ability of the Union government to stand surety for loans taken by other entities, such as state governments, public sector undertakings, or other approved bodies.
Crucially, Article 292 does not grant an unlimited borrowing or guaranteeing power to the executive. It clearly states that this power is subject to limitations. These limitations are to be fixed by Parliament by law. This provision underscores the principle of parliamentary control over government finance. While the executive has the power to borrow and give guarantees, Parliament has the ultimate authority to set the maximum amount or other conditions governing such borrowing and guarantees through legislation. This parliamentary oversight ensures that the government’s debt remains within manageable limits and promotes fiscal prudence.
Detailed Notes
- Executive Power of Union: The article vests the power to borrow money and give guarantees with the executive branch of the Union government.
- Security: Any borrowing made by the Union government under this article is secured upon the Consolidated Fund of India (CFI). This means the repayment is a charge or liability on the CFI.
- Giving Guarantees: The Union executive also has the power to provide guarantees for loans taken by other entities. These guarantees are also subject to the same limitations.
- Parliamentary Control: The borrowing power and the power to give guarantees are not absolute. They are expressly made subject to limits fixed by Parliament by law.
- Role of Parliament: Parliament can enact laws from time to time to set specific limits on the amount of money the government can borrow or the total amount of guarantees it can provide.
- Fiscal Accountability: This parliamentary limitation is a key mechanism for ensuring fiscal accountability and preventing the executive from accumulating excessive debt without legislative approval.
- Absence of Law: The phrasing “if any, as may from time to time be fixed by Parliament by law” implies that the executive power exists even in the absence of a specific limiting law by Parliament, but the power is subject to such limits once they are fixed. However, generally, governments operate considering the spirit of potential parliamentary limits and seek necessary approvals/authorizations through budget processes and specific legislation.
Additional Comments
- Article 292 is fundamental to the Union government’s ability to manage its finances, including funding budget deficits and undertaking development projects.
- Parliament has enacted laws related to government borrowing, although a single comprehensive law explicitly setting a specific maximum limit as perhaps envisioned by the article has been a subject of discussion and proposals (like Fiscal Responsibility and Budget Management - FRBM Act, which sets targets but not an absolute constitutional limit under 292).
- This article should be read in conjunction with Article 293, which deals with the borrowing powers of state governments, highlighting similarities and differences (e.g., state borrowing is also subject to legislative limits by the State Legislature, but additionally requires consent from the Union in certain circumstances).
- The public debt of the Union Government is incurred under the authority of Article 292.
Summary
Article 292 grants the executive power to the Union government to borrow money upon the security of the Consolidated Fund of India and to give guarantees. This power, while vested in the executive, is expressly made subject to limits that may be fixed by Parliament by law, ensuring legislative control over the government’s borrowing activities.