SC Reserves Order on Kerala Govt’s Plea for Interim Relief Over Financial Issues

The Supreme Court on Friday reserved its order on Kerala government plea’s seeking interim relief in a suit against the Centre, alleging interference with its borrowing powers.

A bench of Justices Surya Kant and K V Viswanathan reserved the order concerning interim relief.

Kerala Government is seeking interim relief on financial matters in a suit against the Centre.

Senior Advocate Kapil Sibal, representing the Kerala Government, has raised concerns over the Centre’s conduct within a federal structure.

Attorney General R Venkataramani, appearing for the Centre, argued that Kerala’s own legislation mandates it to govern its fiscal discipline, and there is no breach of Finance Commission recommendations. The Centre previously proposed granting Rs 5,000 crore to Kerala in the current financial year as a one-time measure, subject to conditions. Senior advocate Kapil Sibal opposed this proposal, stating it presumed the state was not entitled to additional borrowing and deemed Rs 5,000 crore insufficient.

The Apex Court urged both parties to negotiate and resolve the issues. Kerala Government, in its affidavit, asserted that the Centre holds approximately 60 per cent of India’s total debt. Responding to the Attorney General’s notes, Kerala emphasized its minimal share of the country’s debt.

Kerala’s financial situation has drawn criticism from successive Finance Commissions and the CAG, noted the Attorney General. In response to Kerala’s suit, the Centre highlighted Kerala’s fiscal weaknesses. The Attorney General’s written note emphasized that states’ debts affect the country’s credit rating. Kerala Government’s suit argued that the state’s borrowing powers align with its fiscal autonomy as guaranteed by the Constitution.

The Kerala Government contended that the Centre’s interference in the state’s finances, particularly through imposing borrowing ceilings, was unconstitutional.