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. (Answer in 250 words)

Government has restored the borrowing limit of states to 2.5% of GDP (pre-pandemic level). But states can't borrow from other sources if they have any outstanding liability with central government. (Article 293) Implications of usage of restrictions under Article 293: (1) Hinder total autonomy of state - b inability to finance deficit and future interest obligations - Federalism by centre as dependent on it perpetually - b declining net proceeds of tax developed to states due to strict purchases, less - two alternatives - borrowing available (2) Disrupt cooperative federalism - a Centre-state tussle in Supreme Court - litigation for more funds - b Non-implementation of centrally-sponsored schemes like Awas Vijayen in Bengal, Punjab etc. - c Defunkt Aayog - boycott by meeting

But restrictions on states is justified on some grounds: (1) Sub-national bankruptcy - Punjab debt to GDP ratios 46% (limit 20-7 FPM) (2) Fiscal discipline and responsibility (3) Nudge for reforms (G9) borrow extra 0.5%. due to power sector reforms (4) Debt and deficit grapple in borrowing out of private investment fiscal launched (15th Finance Commission recommendation) Way forward - - Boost local resources by vacant land taxation, club watchful expended here - Counter cyclical buffer - to be utilized in emergency Fiscal federalism must adhere to by utilizing interstate councils (Ad 263) and NITI Aayog