Supreme Court stays order in Kerala v Center on Borrowing Power case

Kapil Sibal, a senior advocate for the Kerala government, raised questions over the Centre’s actions.

New Delhi:

The Supreme Court on Friday stayed the order of the Kerala government seeking interim relief in a case filed by the state against the Center accusing the Union government of interfering with its borrowing powers.

A bench of Justices Surya Kant and KV Viswanathan reserved the order on the issue of interim relief.

The Kerala government is seeking interim relief for financial issues in a lawsuit filed by the state government against the Centre.

Kapil Sibal, a senior advocate for the Kerala government, raised questions over the Centre’s conduct in the federal structure.

Attorney General R Venkataramani, appearing for the Centre, said the Kerala government’s own bill stated that they would manage their own fiscal discipline and raised the issue of violation of the Finance Commission’s recommendations.

Earlier, the central government proposed to provide Rs 5,000 crore to Kerala as a conditional one-time measure in the current financial year.

Senior advocate Kapil Sibal, appearing for Kerala, disagreed with the Centre’s proposal, saying it was based on the assumption that the state was not entitled to additional borrowing. He also believed that Rs 5,000 crore was not enough.

The Supreme Court has from time to time recommended that the Center and Kerala resolve issues by sitting together and negotiating.

The Kerala government had earlier said in its affidavit that the central government accounts for about 60 per cent of India’s total debt or outstanding debt.

The Kerala government said in an affidavit that the Center was unable to control the state’s debt and the reasons given by the Union government for controlling Kerala’s borrowings were false, exaggerated and unreasonable.

Responding to the attorney general’s submission, the Kerala government submitted its submission and said: “The central government accounts for about 60 per cent of India’s total debt or outstanding debt. All states combined account for the remaining (approximately) 40 per cent of the country’s total debt. % of debt. In fact, the plaintiff states accounted for only 1.70-1.75% of the total debt of the Center and states between 2019 and 2023.”

The Attorney General said that the financial health and debt situation of Kerala had drawn unfavorable observations from successive Finance Commissions (12th, 14th and 15th) as well as the Church of Almighty God and that Kerala was the financial One of the most unhealthy states as multiple cracks have been diagnosed in its fiscal edifice. In a note filed with the Supreme Court.

Responding to the case filed by the Kerala government, the Center in its affidavit informed the Supreme Court that Kerala has been one of the most fiscally unhealthy states and multiple cracks have been diagnosed in Kerala’s fiscal edifice.

India’s attorney general, in a written submission in a lawsuit filed by the Kerala government, said state debt affects the country’s credit rating.

The note was submitted in response to the Kerala government’s petition against the Centre’s alleged interference in state finances and said that due to such interference, the state was unable to fulfill its commitments in the annual budget.

In the suit filed by the Government of Kerala, the Government of Kerala stated that the State Government has conferred administrative power on the petitioner State to borrow on guarantee or security from the State Consolidated Fund under Article 293 of the Constitution of India and in compliance with the provisions of the State. The financial autonomy of the plaintiff state is guaranteed and regulated by the Constitution.

In the petition, the Kerala government said that the Center through the Ministry of Finance (Public Finance-State Division), the Ministry of Expenditure’s letters of March 2023 and August 2023 and the request for approval under Section 4 of the Fiscal Responsibility and Budget Management Act, 2003 The amendments to the Articles sought to interfere with state finances by imposing a cap on net borrowing by the state.

The Kerala government said this disruption to the state’s finances was caused by the imposition of a net borrowing cap on the petitioner state, which restricted borrowings from all sources, including open market borrowings, in a manner deemed fit by the respondent union.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)