The restrictions imposed by 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 provides for Centre's control on State's borrowing for fiscal discipline in line with Indian quasi-federalism but often synonymous to annihilative federalism. Constitutional Validity of A-293: - State's finance spillover - Tonational-fiance AB - Stop Populism Theory - FRBM Act - States Debt to GDP ratio - Rise of off-Budget - Rising debt m Spells, KMIT for expenditure - Inflation & Macroeconomic Stability Legal Framework - FRBM limits debt to 60%, Centre 40%, State A-293 Harms Cooperative Federalism: - Against Constitutional Values of Federalism (2SR Bommais Case - CARE Structure Doctrine) - Harms autonomy of state (Ex: Kerala restricted from further borrowing by state) - Political conflicts centre-state conflict on fiscal division seen in Opposition states - Impact of Financial policies of centre under 15 Finance Commission - Developed states get Tamil Nadu for Re1 lower share - Baiars - RE1 for Re1 - Depend on loans for state expenditure increasing fiscal deficit, affect social schemes - Burden of centrally sponsored schemes, AGI grants at 0% (Fonner system) 0.8% new deficit

A-293 Harms Cooperative Federalism continued: - Against Constitutional Values of Federalism (2SR Bommais Case - CARE Structure Doctrine) - Harms autonomy of state (Ex: Kerala restricted from further borrowing by state) - Political conflicts centre-state conflict on fiscal division seen in Opposition states - Impact of Financial policies of centre under 15 Finance Commission - Developed states get Tamil Nadu for Re1 lower share - Baiars - RE1 for Re1 - Depend on loans for state expenditure increasing fiscal deficit, affect social schemes - Burden of centrally sponsored schemes, AGI grants at 0% (Fonner system) 0.8% new deficit Way Forward: - Collaborative Approach: constructive dialogue b/w states & centre - LUST devolution - 16 Finance Commission should increase states share & horizontal Revisit LUST compensation Cess for states - Fiscal Prudence: Focus more on capital investment (80 years loans) to states over fresher - Create Fiscal Council: with centre & State for cooperation (Kesher Committee) Sarleri Commission - decentralization leads to imperfection at centre & anaemic in states. Thus, a collaborative federal approach needed for India

A-293 Harms Cooperative Federalism continued: - FRBM act: states have their own acts to regulate fiscal deficit & consolidation - Fiscal deficit: Kerala - 2.6% of GDP, Centre - 4.7% of GDP Way forward: - Collaborative Approach: constructive dialogue b/w states & centre - LUST devolution - 16 Finance Commission should increase states share & horizontal Revisit LUST compensation Cess for states - Fiscal Prudence: Focus more on capital investment (80 years loans) to states - Create Fiscal Council: with centre & State for cooperation (Kesher Committee) Sarleri Commission - decentralization leads to imperfection at centre & anaemic in states. Thus, a collaborative federal approach needed for India