Centre wants us to withdraw Supreme Court plea seeking access to funds: Kerala FM Balagopal

By Aishwarya Nair | First Published Feb 20, 2024, 11:37 AM IST

Kerala Finance Minister KN Balagopal said that the Centre has demanded the state to withdraw cases against the central government at the Supreme Court if the required amount to the state has to be released.

Kollam: Kerala Finance Minister K N Balagopal said that the central government asked to withdraw the case filed in the Supreme Court against the Centre accusing it of undermining its fiscal autonomy. He stated that the withdrawal of the case was a requirement set by the Centre to release the approximately Rs 12,000 crore that Kerala would have obtained without any issues. This demand was presented before the Supreme Court by the Centre on Monday.

Kerala-Centre talks over borrowing limit inconclusive

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"The Centre has told the SC that we have to withdraw the case for the funds to be released," the finance minister told reporters in Kollam on Monday.
The case has now been posted for March 6.

In the petition filed in the Supreme Court, Kerala alleged that the Center is squeezing financially and that the state government is struggling even to pay salaries and pensions. The state government is heading towards a serious financial crisis.

On February 15, a delegation led by the finance minister held talks with a central team led by Union finance secretary T V Somanathan.

"There was no positive outcome at today's meeting... there was no breakthrough. We submitted the most feasible options (to the Centre)," Balagopal had said.

Considering a lawsuit that challenges the restrictions placed on states' capacity to borrow money, the Supreme Court on Tuesday asked the Kerala government to join in dialogue to resolve the issues with the Centre. An SC bench comprising Justices Surya Kant and KV Vishwanathan recommended that the finance secretary of the state should meet the union finance minister and resolve the deadlock through negotiation.

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This move of the central government comes at a time when the Lok Sabha elections are around the corner. According to the petition submitted by the state in the Supreme Court, the central share is the right of the state.

The 14th Finance Commission recommends that interest payments never exceed 10 percent of total revenue. However, in Kerala's situation, the interest the state is currently paying will come to 19.98 percent of revenue. The Centre further emphasised that the state is utilising the borrowed funds to pay for ongoing expenses, such as paying salaries and pensions, rather than investing them in profitable ventures.

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