Kerala over-borrowing in recent years, Modi govt informs Supreme Court
By Aishwarya Nair | First Published Mar 22, 2024, 12:37 PM ISTThe Kerala government has raised concerns about its borrowing ceiling, alleging Centre's interference in regulating the state's finances. The Centre argued in the Supreme Court that Kerala has been overborrowing in recent years, citing statistics.
The Centre informed the Supreme Court on Thursday that the Kerala government has been exceeding its borrowing limits in recent years, highlighting concerns about the state's financial condition. This statement came during the court's hearing of Kerala's case regarding the cap on net borrowing.
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Despite the Centre's assertion that the Kerala government has been overborrowing in recent years, the state government has countered by stating that its finances are "sustainable enough" to accommodate the excess borrowing from previous years . During the hearing on interim relief in a suit filed by the Kerala government, a bench comprising Justices Surya Kant and K V Viswanathan listened to arguments regarding the state's accusation against the Centre. The state alleged that the Centre had interfered with its exclusive authority to regulate finances by imposing a borrowing ceiling.
Senior advocate Kapil Sibal, appearing for Kerala, said under the constitutional structure, the states have their budget and are entitled to manage their expenditure.
“I (Kerala) am saying I have enough fiscal space there to borrow…,” Sibal said, adding, “I am saying that the state finances are sustainable enough to bear the overborrowings in the previous years and have this borrowing here”.
“What I am going to in fact persuade your lordships and demonstrate to your lordships is that whatever we are doing, even if we do the extra borrowing, it is within the limit,” he said.
Additional Solicitor General N Venkataraman, representing the Centre, contended before the bench that the state had made inaccurate claims. Citing statistics, he asserted that Kerala had been overborrowing in recent years. He urged the court to consider the state's financial parameters while deciding on interim relief.
The arguments in the matter would continue on Friday.
On March 13, the Centre informed the apex court that it was prepared to permit the Kerala government to borrow Rs 5,000 crore, under specific conditions, to address the state's financial challenges as a "very special and exceptional measure." Nevertheless, the Kerala government contended that Rs 5,000 crore was insufficient, asserting that the absolute minimum requirement amounted to Rs 10,000 crore.
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