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.

Article 293 - requires States to obtain prior consent of Centre to borrow, if there exist an loan outstanding to the latter. Centre may impose such conditions to grant the consent as it deems fit. Restrictions on borrowing power As per 15th finance commission recommendations - ceiling limit on State borrowing = 3.5% of GSDP

This hinders fiscal autonomy of States:- 1) Ties states to the Centre to seek permissions everytime they borrow 2) Erodes their sovereignty within the federal framework 3) May hurt policy implementation and administrative decision making 4) One size fits all formula - disregards unique aspects of State's economic conditions. It Disrupts cooperative Federalism 1) Widens Trust deficit between Centre & States eg Southern States & Union 2) Confrontational Federalism - litigations

in the Supreme Court eg Kerala V/s Central Govt 3) Hurts Fiscal federalism through centralisation of decision making 4) Erodes principle of SUBSIDIARITY - cardinal to cooperative federalism Way forward As per Puncchi & Sarkaria Commissions 1) Consultative & collaborative approach 2) Autonomy to be devolved to States with respect to borrowing powers