Government simplifies the consent mechanism for OMBs

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, government has decided to simplify the consent mechanism for OMBs under Article 293 (3) of the Constitution. Finance Ministry said that under the simplified mechanism, states would be given one-time consent to borrow funds based on their borrowing calendar for the first nine months of the fiscal.

The 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 the fourth quarter and last in the month of March after the assessment of actual borrowings by the States.

Ministry further said based on the assessment of details of borrowings and repayment thereof actual 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 that is March will be given based on the re-assessment of actual borrowings for the first 11 months by the States. Till now, states were required to obtain quarterly consent from the Central Government for raising OMBs within the Net Borrowing Ceiling fixed for each of the States as per the formula prescribed by the Fourteenth Finance Commission.