Article 293 of CoI : Article 293: Borrowing by States.

Explanation using Example

Example 1:

Scenario: The State of Maharashtra wants to borrow ₹10,000 crores to fund a new infrastructure project.

Application of Article 293:

1. Clause (1): Maharashtra can borrow this amount within India using the security of its Consolidated Fund, but it must adhere to any borrowing limits set by its State Legislature.
2. Clause (2): If Maharashtra needs additional funds beyond its borrowing capacity, it can request a loan from the Government of India, which can provide the loan under conditions set by Parliament.
3. Clause (3): If Maharashtra already has an outstanding loan from the Government of India, it cannot raise a new loan without the consent of the Government of India.
4. Clause (4): The Government of India may grant consent for Maharashtra to raise the new loan, but it can impose conditions, such as requiring Maharashtra to use the funds for specific purposes or to adhere to certain repayment terms.

Example 2:

Scenario: The State of Tamil Nadu has an outstanding loan of ₹5,000 crores from the Government of India and wants to borrow an additional ₹2,000 crores for a healthcare project.

Application of Article 293:

1. Clause (1): Tamil Nadu can borrow within India using the security of its Consolidated Fund, but it must follow any limits set by its State Legislature.
2. Clause (2): Tamil Nadu can request a loan from the Government of India if it needs more funds, and the Government of India can provide this loan under conditions set by Parliament.
3. Clause (3): Since Tamil Nadu has an outstanding loan from the Government of India, it cannot raise the additional ₹2,000 crores without the consent of the Government of India.
4. Clause (4): The Government of India may grant consent for Tamil Nadu to raise the new loan, but it may impose conditions, such as requiring Tamil Nadu to prioritize repayment of the existing loan or to use the new loan specifically for the healthcare project.

Example 3:

Scenario: The State of Karnataka wants to provide a guarantee for a ₹1,000 crore loan taken by a state-owned enterprise to develop renewable energy projects.

Application of Article 293:

1. Clause (1): Karnataka can provide a guarantee for the loan within the limits set by its State Legislature.
2. Clause (2): If Karnataka needs to provide a guarantee beyond its capacity, it can request the Government of India to provide the guarantee, provided it does not exceed the limits set under Article 292.
3. Clause (3): If Karnataka has an outstanding loan or guarantee from the Government of India, it cannot provide a new guarantee without the consent of the Government of India.
4. Clause (4): The Government of India may grant consent for Karnataka to provide the new guarantee, but it may impose conditions, such as requiring Karnataka to ensure the state-owned enterprise meets certain financial criteria or to limit the guarantee to specific aspects of the renewable energy project.