Hindi English Translation || Editorial || Fiscal battle: On borrowings and Kerala’s suit

Fiscal battle: On borrowings and Kerala’s suit

Kerala’s suit raises questions on States’ right to borrow and the Centre’s power to limit it

The Supreme Court of India order referring a suit (court case, lawsuit, trial, litigation, legal proceedings, legal action) filed by Kerala, challenging the Centre’s decisions curtailing (decrease, lessen, reduce, restrict, limit) its borrowings (उधार), to a Constitution Bench (संविधान पीठ) is a welcome (स्वागत) development (incident, event, occurrence, happening, phenomenon, situation, turn of events). The Court declined to grant (give, provide, present) an interim (अन्तरिम) order to restore the position prior to the imposition (enforcement) of borrowing limits by the Centre, but the referral (reference, transfer, passing on, handover (a matter for decision or consideration to some authority)) will give a larger Bench an opportunity (अवसर) to examine the extent (ambit, level, scope, range, degree) to which the Union government may regulate (control) a State’s borrowings. The litigation (मुकदमेबाजी) is much more (बहुत अधिक) than a tussle (fight, clash, quarrel, argument, contention) over the Centre’s charge (accusation, allegation, blame) of fiscal (राजकोषीय) mismanagement (maladministration, misconduct, malpractice, dereliction, mishandling) against the Left Front regime (प्रशासन) in the State. The Court has recognised (acknowledge, accept, admit, realize, be conscious of, be aware of) that it is also a constitutional (संवैधानिक) question on Centre-State relations: an apparent (evident, noticeable, visible, obvious, striking) conflict (dispute, quarrel, disagreement, difference of opinion, friction) between efforts to maintain (बनाए रखना) the country’s fiscal health on the one hand (एक तरफ) and moves (कदम, कार्रवाई) that undermine (कमजोर, नष्ट करना) the fiscal space (it is commonly defined as the budgetary room that allows a government to provide resources for public purposes without undermining fiscal sustainability) of States on the other. At the heart of (be the most important part of something; at the centre of) this dispute is Article 293, which confers (grant, give, present, endow, vest in) executive (relating to a branch of government which enforces the law as written by the legislature and interpreted by the judiciary) power on the States to borrow money within limits prescribed (determine, specify, lay down, stipulate, establish, formulate) by the State legislature (law-making body or governing body; parliament, congress, assembly). It also allows the Union to extend (give, offer, grant, present, confer, bestow, hold out) loans and guarantees to the States, and requires the Centre to give its consent (approval, acceptance, agreement, assent, concurrence) and impose conditions for States to raise further loans while earlier ones are outstanding (unpaid, unsettled, payable, overdue, in arrears, in the red). Kerala contends (state, indicate, profess, argue, claim, assert, profess) that the Article does not confer on the Centre any power to regulate all State loans and that it can impose conditions only on borrowings from the Centre.

Kerala also challenges the Union’s decision to include borrowings by State-owned (operated/run by the government) enterprises (organization, undertaking, business, company) and the liabilities (financial liability, indebtedness, financial obligation, arrears; (an obligation pay money to another party)) on its public account (Article 266 of the Constitution defines the Public Account as being those funds that are received on behalf of the Government of India. Money held by the government in a trust — such as in the case of Provident Funds, Small Savings collections, income of government set apart for expenditure on specific objects like road development, primary education, reserve/special Funds, etc. — are kept in the Public Account. These funds do not belong to the government) under its ‘Net Borrowing Ceiling’ (quantified as 3% of its projected Gross State Domestic Product (it is defined as a measure, in monetary terms, of the volume of all goods and services produced within the boundaries of the State during a given period of time, accounted without duplication) for 2023-24, or ₹32,442 crore). A 2018 amendment to the Fiscal Responsibility (the act of creating, optimizing and maintaining a balanced budget) and Budget Management Act capped (limit, ceiling, upper limit, limitation) the ‘general government debt’, or the sum total of the debts (liability, financial obligation, borrowed capital) of the Central and State governments, at 60% of the GDP. The Union government argues that public finance being a national issue, it wanted to prevent the use of off-budget (not included in the regular government budget) borrowings to bypass (elude, avoid, dodge, escape, sidestep, evade, circumvent, be evasive about) the borrowing ceiling (limit, cap, upper limit, limitation). It also claims (state, allege, argue, contend, assert) that unlimited borrowing by State governments will have the spillover (consequence, outcome, repercussion (an unexpected one)) effect of raising the cost of borrowing and crowding out (exclude, oust, overthrow, remove someone from a place by taking their space) private sector borrowers. The issue comes at a time when the current formula for distribution of revenue is seen as one that penalises (punish, discipline, mete out punishment to) States that perform better on social indicators (social indicators are set of indicators that measure progress towards the policy objectives designed for promoting employment, combating poverty, improving living and working conditions, combating exclusion, developing human resources, etc). It is no surprise that (as expected) Kerala, a topper in social advancement (it refers to bringing about improvement in the lives of individuals or groups belonging to underprivileged and vulnerable sections of the society), faces this crisis. In an era in which a major revenue source for the States has been subsumed (include, incorporate, absorb, encompass) by a system in which they share the proceeds (the amount of money received from an event/activity or from the sale of goods or services; income, revenue, profit, earnings, returns, gains) of a common Goods and Services Tax with the Centre, fiscal space has become precious. It is now up to the highest court to determine how strict the Centre should be on borrowing limits and giving consent to hold States to their fiscal obligations (financial obligation, debt, liability, borrowed capital) without violating (contravene, offend, break, breach, encroach on, trespass on, infringe on, obtrude on) federal (relating to a system of government in which establishments such as states or provinces share power with a national government) norms (standard, convention, regulation).

Courtesy: The Hindu

Important Word List With Meaning

1.fiscal (adjective)

Hindi Meaning - राजकोषीय
English Meaning - relating to government money or public money, especially taxes; financial, monetary.

2.borrowing (noun)

Hindi Meaning - उधार
English Meaning - In finance and economics, borrowing generally refers to receiving money. In simple terms, borrowing can be illustrated as the act of receiving a certain amount of money with the intention that the receiver will have to return the same amount of money after a fixed span of time.

3.Constitution Bench (noun)

Hindi Meaning - संविधान पीठ
English Meaning - a bench of the Supreme Court having five or more judges on it. These benches are not a routine phenomenon. Constitution Benches are exceptions, set up only if some circumstances exist).

4.welcome (adjective)

Hindi Meaning - स्वागत
English Meaning - pleasing, agreeable, favourable, promising, much needed.

5.interim (adjective)

Hindi Meaning - अन्तरिम
English Meaning - provisional, temporary, short-term, transitional.

6.opportunity (noun)

Hindi Meaning - अवसर
English Meaning - chance, possibility, option.

7.litigation (noun)

Hindi Meaning - मुकदमेबाजी
English Meaning - legal action, lawsuit, legal case.

8.much more (phrase)

Hindi Meaning - बहुत अधिक
English Meaning - a lot more.

9.fiscal mismanagement (noun)

Hindi Meaning - राजकोषीय कुप्रबंधन
English Meaning - fiscal mismanagement, deliberately or not, is handled in a way that can be characterized as “wrong, bad, careless, inefficient or incompetent” and that will reflect negatively upon the financial standing.

10.regime (noun)

Hindi Meaning - प्रशासन
English Meaning - government.

11.constitutional (adjective)

Hindi Meaning - संवैधानिक
English Meaning - legal, lawful, legitimate, rightful.

12.maintain (verb)

Hindi Meaning - बनाए रखना
English Meaning - continue, carry on, sustain, preserve.

13.on the one hand (phrase)

Hindi Meaning - एक तरफ
English Meaning - it is used to introduce the first of two contrasting different, points, facts, or ways of looking at something. It is always followed later by “on the other hand” or ‘on the other’.

14.move (noun)

Hindi Meaning - कदम, कार्रवाई
English Meaning - action, act, step, measure.

15.undermine (verb)

Hindi Meaning - कमजोर, नष्ट करना
English Meaning - weaken, subvert, sabotage, damage.

16.suit (noun)

English Meaning - court case, lawsuit, trial, litigation, legal proceedings, legal action.

17.curtail (verb)

English Meaning - decrease, lessen, reduce, restrict, limit.

18.bench (noun)

English Meaning - a court of law with a number of judges.

19.Division Bench (noun)

English Meaning - a bench of two or three judges is called a division bench.

20.development (noun)

English Meaning - incident, event, occurrence, happening, phenomenon, situation, turn of events,.

21.grant (verb)

English Meaning - give, provide, present.

22.imposition (noun)

English Meaning - enforcement.

23.referral (noun)

English Meaning - reference, transfer, passing on, handover (a matter for decision or consideration to some authority).

24.extent (noun)

English Meaning - ambit, level, scope, range, degree.

25.regulate (verb)

English Meaning - control.

26.tussle (noun)

English Meaning - fight, clash, quarrel, argument, contention.

27.charge (noun)

English Meaning - accusation, allegation, blame.

28.mismanagement (noun)

English Meaning - maladministration, misconduct, malpractice, dereliction, mishandling.

29.recognise (verb)

English Meaning - acknowledge, accept, admit, realize, be conscious of, be aware of.

30.apparent (adjective)

English Meaning - evident, noticeable, visible, obvious, striking.

31.conflict (noun)

English Meaning - dispute, quarrel, disagreement, difference of opinion, friction,

32.fiscal space (noun)

English Meaning - it is commonly defined as the budgetary room that allows a government to provide resources for public purposes without undermining fiscal sustainability.

33.at the heart of (phrase)

English Meaning - be the most important part of something; at the centre of.

34.Article 293 of the Constitution of India (noun)

English Meaning - it deals with “Borrowing by States”.

35.confer (verb)

English Meaning - grant, give, present, endow, vest in.

36.executive (adjective)

English Meaning - relating to a branch of government which enforces the law as written by the legislature and interpreted by the judiciary.

37.executive power (noun)

English Meaning - it broadly consists of the power to manage public affairs and to implement the law.

38.prescribe (verb)

English Meaning - determine, specify, lay down, stipulate, establish, formulate.

39.legislature (noun)

English Meaning - law-making body or governing body; parliament, congress, assembly.

40.the legislature (noun)

English Meaning - the House; a deliberative body of persons, usually elective, who are empowered to make, change, or repeal the laws of a country or state. India follows a bicameral (two chambers/parts) system at both the centre and state level.

41.extend (verb)

English Meaning - give, offer, grant, present, confer, bestow, hold out.

42.consent (noun)

English Meaning - approval, acceptance, agreement, assent, concurrence.

43.outstanding (adjective)

English Meaning - unpaid, unsettled, payable, overdue, in arrears, in the red.

44.contend (verb)

English Meaning - state, indicate, profess, argue, claim, assert, profess.

45.state-owned (adjective)

English Meaning - operated/run by the government.

46.enterprise (noun)

English Meaning - organization, undertaking, business, company.

47.liabilities (noun)

English Meaning - financial liability, indebtedness, financial obligation, arrears; (an obligation pay money to another party).

48.public account (noun)

English Meaning - Article 266 of the Constitution defines the Public Account as being those funds that are received on behalf of the Government of India. Money held by the government in a trust — such as in the case of Provident Funds, Small Savings collections, income of government set apart for expenditure on specific objects like road development, primary education, reserve/special Funds, etc. — are kept in the Public Account. These funds do not belong to the government.

49.Net Borrowing Ceiling (NBC) (noun)

English Meaning - The NBC imposes a limitation on borrowings of a State from all sources including open market borrowings. The NBC for States is fixed at 3% of the Gross State Domestic Product (GSDP) or ₹8,59,988 crore in absolute terms for the Financial Year (FY) 2023-24 as recommended by the 15th Finance Commission.

50.quantify (verb)

English Meaning - measure the quantity of.

51.projected (adjective)

English Meaning - estimated, expected, calculated, predicted.

52.Gross State Domestic Product (GSDP) (noun)

English Meaning - it is defined as a measure, in monetary terms, of the volume of all goods and services produced within the boundaries of the State during a given period of time, accounted without duplication.

53.Fiscal Responsibility and Budget Management (FRBM) Act (2003) (noun)

English Meaning - Fiscal Responsibility and Budget Management (FRBM) Act enacted in 2003 by the parliament, establishes financial discipline to reduce fiscal deficit. The FRBM Act aims to introduce transparency in India’s fiscal management systems. The Act’s long-term objective is for India to achieve fiscal stability and to give the Reserve Bank of India (RBI) flexibility to deal with inflation in India. The FRBM Act was enacted to introduce more equitable distribution of India’s debt over the years.

54.fiscal responsibility (noun)

English Meaning - the act of creating, optimizing and maintaining a balanced budget.

55.cap (noun)

English Meaning - limit, ceiling, upper limit, limitation.

56.government debt/public debt/sovereign debt (noun)

English Meaning - it represents the total outstanding debt (bonds and other securities) of a country’s central government.

57.debt (noun)

English Meaning - liability, financial obligation, borrowed capital.

58.Gross domestic product (GDP) (noun)

English Meaning - a measure of economic activity in a country. It is the total value of a country’s annual output of goods and service.

59.off-budget (adjective)

English Meaning - not included in the regular government budget.

60.bypass (verb)

English Meaning - elude, avoid, dodge, escape, sidestep, evade, circumvent, be evasive about.

61.ceiling (noun)

English Meaning - limit, cap, upper limit, limitation.

62.claim (verb)

English Meaning - state, allege, argue, contend, assert.

63.spillover (noun)

English Meaning - consequence, outcome, repercussion (an unexpected one).

64.crowd out (phrasal verb)

English Meaning - exclude, oust, overthrow, remove someone from a place by taking their space.

65.penalise (verb)

English Meaning - punish, discipline, mete out punishment to.

66.social indicators (noun)

English Meaning - social indicators are set of indicators that measure progress towards the policy objectives designed for promoting employment, combating poverty, improving living and working conditions, combating exclusion, developing human resources, etc.

67.social advancement (noun)

English Meaning - it refers to bringing about improvement in the lives of individuals or groups belonging to underprivileged and vulnerable sections of the society.

68.subsume (verb)

English Meaning - include, incorporate, absorb, encompass.

69.proceeds (noun)

English Meaning - the amount of money received from an event/activity or from the sale of goods or services; income, revenue, profit, earnings, returns, gains.

70.hold to (phrasal verb)

English Meaning -force someone to comply with a commitment/obligation.

71.fiscal obligation (noun)

English Meaning - financial obligation, debt, liability, borrowed capital.

72.violate (verb)

English Meaning - contravene, offend, break, breach, encroach on, trespass on, infringe on, obtrude on.

73.federal (adjective)

English Meaning - relating to a system of government in which establishments such as states or provinces share power with a national government.

74.norm (noun)

English Meaning - standard, convention, regulation.

75.It is no surprise that (phrase)

English Meaning - as expected.