The Supreme Court held that Union has currently bailed Kerala out of its current financial crisis by allowing it ₹13,608 crore, which is a “substantial relief”. File
| Photo Credit: PTI
In an interim order, a two-judge Bench of the Supreme Court on April 1 referred to Constitution Bench a suit filed by the State of Kerala accusing the Union of India of arbitrarily limiting its borrowing powers and bringing the State to the brink of financial emergency.
The Supreme Court, however, held that Union has currently bailed Kerala out of its current financial crisis by allowing it ₹13,608 crore, which is a “substantial relief”.
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The Kerala Government had filed a suit in the apex court accusing the Centre of interfering in the exercise of its “exclusive, autonomous and plenary powers” to regulate the State’s finances by imposing a cap on borrowing.
The Centre had told the apex court that the Kerala government had been “over-borrowing” in recent years which reflected its difficult financial situation.
The Kerala Government asserted its finances are “sustainable enough” to bear the burden of over-borrowing in the previous years.
On March 13, the Centre had told the top court that it was willing to allow the Kerala government to borrow ₹5,000 crore, subject to certain conditions, to deal with the financial issues facing the State as a “very special and exceptional measure”. However, the Kerala Government had said ₹5,000 crore “does not take us anywhere” and the absolute minimum requirement stood at ₹10,000 crore.
In an original suit filed under Article 131 of the Constitution, the Kerala Government had said the Constitution bestows fiscal autonomy upon States to regulate their finances under various articles, and the borrowing limits or the extent of such borrowings are regulated by State legislation.
Article 131 of the Constitution deals with the original jurisdiction of the apex court in any dispute between the Centre and States.
(With PTI inputs)
