(MENAFN- Live Mint) "The Supreme Court has reserved its judgment in the case regarding borrowing limits between the Union government and the state of Kerala.A SC bench of Justice Surya Kant and Justice K.V. Viswanathan has reserved the verdict following an extensive hearing that spanned over two consecutive days Kerala and the Union government urged the court to pass an interim order in the case before the conclusion of the current financial year on 31 March after several rounds of talks failed to yield an agreement filed the suit against the Centre under Article 131 of the Constitution, contesting the Union's norms on borrowing limits and highlighting the unique financial landscape of the state negotiations, Kerala initially requested the Centre's approval to borrow ₹19,351 crore. While the Centre initially agreed to allow an additional borrowing of ₹13,608 crores, it insisted that Kerala withdraw the legal suit. However, the court intervened, stating that the Centre cannot impose conditions on Kerala to withdraw the lawsuit, Kerala rejected the Centre's offer of ₹5,000 crore as a one-time measure, citing various conditions. Instead, the state demanded a minimum of ₹10,000 crore as a one-time measure, arguing that the proposed amount was insufficient to meet essential obligations such as public fund disbursements, pensions, and pay revisions advocate Kapil Sibal representing Kerala argued that the Centre's restrictions constituted executive overreach, emphasizing Kerala's constitutional authority to determine its budget and borrowing needs. Sibal highlighted the significant reduction in Kerala's borrowing from the Union government post-liberalization and objected to the Union's interference in the state's financial affairs response, additional solicitor general N. Venkataraman contested Kerala's claims, alleging misrepresentation of figures and pointing out that the state's consistent over-borrowing in recent years. He raised concerns about Kerala's macroeconomic stability and the potential adverse effects of granting the requested ₹10,000 crore to the Union government, any financial stress faced by Kerala was due to mismanagement, citing substantial financial resources provided to the state, including payments to meet GST compensation shortfalls. The Union government noted the importance of public finance management in maintaining India's credit rating minister Nirmala Sitharaman clarified in Parliament in December that there was no proposal to relax rules on state governments' borrowing capacity for FY24, including Kerala's.
MENAFN22032024007365015876ID1108011085
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.