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Answer

Correct Option is Only 2

Articles 268 to 293 in Part XII of the Constitution deal with Centre-state financial relations. Statutory Grants Article 275 empowers the Parliament to make grants to the states which are in need of financial assistance and not to every state. Also, different sums may be fixed for different states. These sums are charged on the Consolidated Fund of India every year(non-vatable by the Parliament). Discretionary Grants Article 282 empowers both the Centre and the states to make any grants for any public purpose, even if it is not within their respective legislative competence. Under this provision, the Centre makes grants to the states. Notably, the discretionary grants form the larger part of the Central grants to the states when compared with that of the statutory grants. The Constitution makes the following provisions with regard to the borrowing powers of the Centre and the states 1. The Central government can borrow either within India or outside upon the security of the Consolidated Fund of India or can give guarantees, but both within the limits fixed by the Parliament. So far, no such law has been enacted by the Parliament. 2. A state government can borrow within India (and not abroad) upon the security of the Consolidated Fund of the State or can give guarantees, but both within the limits fixed by the legislature of that state. Hence only statement 2 is correct.

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