In a major relief to Kerala, the Supreme Court on Tuesday urged the Centre to relax the borrowing limits for the state for the current financial year to tide over its financial crisis as a one-time measure as a special case.
A bench comprising Justice Surya Kant and Justice KV Viswanathan said the Centre could make up for it in the next financial year by introducing stricter conditions for financial aid to the state.
Attorney General R. Venkataramani and Additional Solicitor General N Venkataraman raised objections to granting relaxations initially before agreeing to discuss the issue with the government and report back to the court on Wednesday.
The development came in the court during an oral mention made by senior advocate Kapil Sibal, appearing for Kerala. Sibal informed the court that the negotiations between the state and the Centre, which took place on the court’s suggestion last week, had failed. Last week, the Centre declined Kerala’s request to permit borrowing of Rs 19,351 crore.
Additional Solicitor General N Venkataraman said the Centre had refused to be liberal with other states.To this, Justice Surya Kant said the Centre could afford to be slightly liberal and give a one-time package as a special case to Kerala but impose more rigid conditions in future budgets.
The Additional Solicitor General said the court should ask Kerala why they could not make ends meet. However, he said the Centre did not want to be at loggerheads with the state.
Kerala initiated the original suit against the Centre under Article 131 of the Constitution, challenging its norms on borrowing limits. Kerala in its petition stated that the state is reeling under a severe financial crisis and that there is a shortage of funds to disburse pension, dearness allowance, benefits, etc. The state said the arbitrary limitations set by the Centre had brought it to the brink of a financial emergency. Hitting back, the Centre accused Kerala of being one of the most financially unhealthy states in the country.