Kerala-Centre talks over borrowing limit inconclusive

By Aishwarya Nair | First Published Feb 16, 2024, 9:56 AM IST

Finance Minister of Kerala KN Balagopal said that the discussion between the Centre and the state on the borrowing limit was inconclusive the other day. The central government did not accept the demands of Kerala, he said.

New Delhi: Finance Minister of Kerala KN Balagopal on Thursday (Feb 15) said that the discussion between the Centre and the state on the borrowing limit as per the directive of the Supreme Court was unsuccessful. He said that the Centre did not accept the demands made by Kerala. It is clear from the discussion that the Center is unhappy with Kerala filing a case against reducing the borrowing limit.

During a hearing on a petition filed by the Kerala government, alleging that the Centre was interfering with the exercise of its "exclusive, autonomous and plenary powers" to regulate the state's finances by imposing a ceiling on net borrowing, the Supreme Court suggested holding a meeting with the Centre. The discussion took place in New Delhi.

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A four-member group, headed by Balagopal, held a meeting with central government officials, including the 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 said at a press briefing here.

Based on the discussion, it seems that the ongoing legal matter is a barrier to talking about the significant issues brought up by the state, according to Balagopal.

Apart from Balagopal, other members of the group are Chief Principal Secretary to the Chief Minister KM Abraham, Finance Principal Secretary Rabindra Kumar Aggarwal and Advocate General K Gopalakrishna Kurup. From the Centre's side, apart from Somanathan, Additional Solicitor General N Venkatraman, Additional Secretary Sajjan Singh Yadav, and Joint Secretary Amit Singh Negi were present in the meeting.

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.

In an original suit filed under Article 131 of the Constitution, the Kerala government has said the Constitution bestows fiscal autonomy on states to regulate their finances under various articles, and borrowing limits or the extent of such borrowings are regulated by state legislation.

The Supreme Court has the authority to resolve disagreements between states or between the Centre under Article 131. The BJP-led central government's strategy towards states is upsetting Kerala's ruling Left Democratic Front (LDF).

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