Central Government decides to simplify the consent mechanism for Open Market Borrowings (OMBs) under Article 293(3) of Constitution of India for raising OMBs by the States- (Press Information Bureau) (18 Aug 2016)
MANU/PIBU/0704/2016
Banking
In the spirit of Co-operative federalism and in order to bring-in the transparency and predictability in the Open Market Borrowings (OMBs) by the States, the Central Government has decided to simplify the consent mechanism for OMBs under Article 293 (3) of the Constitution.
Till now, States were required to obtain quarterly consent from the Central Government for raising OMBs within the Net Borrowing Ceiling (NBC) fixed for each of the States as per the formula prescribed by the Fourteenth Finance Commission (FFC). The simplified mechanism would, however, allow the States to prepare their borrowing calendar for the first nine months and seek one-time consent for raising OMBs during the first nine months of the Financial Year. Thereafter, based on the assessment of details of borrowings and repayment thereof (actuals for first 3 quarters and estimates for last quarter), consent for the first two months of Fourth Quarter will be given. The consent for the last month i.e. March will be given based on the re-assessment of actual borrowings for the first 11 months by the States.
Thus, simplified procedure will ensure that consent under Article 293(3) is issued only on three occasions during the year, one in the month of April for first nine months after fixation of borrowing ceilings, second in the month of December for the first two months of fourth quarter and last in month of March after the assessment of actual borrowings by the States.
Tags : OPEN MARKET BORROWINGS CONSENT MECHANISM SIMPLIFICATION
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