Article 292 of the Costitution of India with Case law
Here is a detailed explanation of Article 292 of the Constitution of India, including relevant case law:
🇮🇳 Article 292 – Borrowing by the Government of India
🔹 Text of Article 292:
“The executive power of the Union extends to the borrowing of money 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.”
🔍 Explanation:
✅ Key Provisions of Article 292:
| Aspect | Description |
|---|---|
| Borrowing Power | The Union Government can borrow money using the Consolidated Fund of India as security. |
| Executive Power | The power to borrow lies with the Executive (i.e. the Central Government). |
| Parliamentary Control | Parliament may set limits on the amount that can be borrowed. |
| Guarantees | Union Government may issue guarantees (e.g., for loans taken by others) within limits set by Parliament. |
📚 What is the Consolidated Fund of India?
It is the chief fund of the Government of India, comprising:
All revenues (tax and non-tax)
All loans raised by the government
All money received in repayment of loans
Borrowing against this fund means the Government uses it as collateral for loans.
⚖️ Relevant Case Laws on Article 292:
🔹 Jayantilal Amritlal Shodhan v. F.N. Rana (1964)
Citation: AIR 1964 SC 648
Relevance:
Though the case primarily dealt with executive powers under Articles 73 and 162, the Supreme Court recognized that executive functions include borrowing, as covered under Article 292.
It affirmed that borrowing is an executive function, but subject to law if Parliament chooses to regulate it.
🔹 State of Madras v. Gannon Dunkerley & Co. (1958)
Citation: AIR 1958 SC 560
Relevance:
Not directly about Article 292, but this case interpreted financial powers and distribution of taxation and borrowing authority between Union and States.
🔹 Union of India v. Harbhajan Singh Dhillon (1972)
Citation: AIR 1972 SC 1061
Relevance:
Clarified the power of Parliament to legislate on financial matters, including matters related to borrowing and public debt (under Entry 93 and 94 of the Union List).
Supported the sovereign power of the Union to raise loans under Article 292.
🏛️ Practical Implications:
Article 292 is frequently invoked in:
Raising domestic or external debt
Issuing sovereign guarantees (e.g., for PSUs or foreign projects)
Managing public debt
Parliament has not yet fixed strict limits under this Article, but in practice, borrowing is regulated through the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
🧾 Comparison with Article 293 (States' Borrowing Powers):
| Feature | Article 292 (Union) | Article 293 (States) |
|---|---|---|
| Authority | Union Government | State Governments |
| Security | Consolidated Fund of India | Consolidated Fund of the State |
| Restrictions | Parliament may impose limits | Restrictions apply if States owe to the Union |
| Guarantees | Can issue sovereign guarantees | Can issue guarantees with Union permission |
📌 Summary Table:
| Aspect | Details |
|---|---|
| Article | 292 |
| Applies to | Government of India (Union) |
| Power | Borrowing on the security of the Consolidated Fund of India |
| Limits | Can be fixed by Parliament |
| Guarantees | Permitted within limits |
| Case Law Support | Executive power includes borrowing; Parliament may regulate |
🧠 Conclusion:
Article 292 empowers the Union Government to borrow funds and issue guarantees for various purposes essential for governance and development. While this power is inherently executive, it is not absolute—Parliament can impose borrowing limits through legislation. This Article plays a vital role in managing India’s fiscal and debt policy.
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