Supreme Court of India
The Union Government on February 13 informed the Supreme Court that it is open for a meeting with the Kerala Government to discuss the financial issues. Attorney General R Venkatramani apprised the bench of justices Surya Kant and KV Vishwanathan that the Union Government is open to the meeting with the Kerala Government. AG Venkatramani also submitted that it came after giving due regard to suggestions made by the court regarding the meeting of the Union and the State Government.
Senior Advocate Kapil Sibal for Kerala Government apprised the court that a delegation from Kerala may arrive and the meeting can take place on February 14 itself. Senior Advocate Sibal also said that the state’s finance minister can’t come to Delhi because of the budget. AG assured to arrange the meeting.
The court asked the Union and the State governments to identify the issues of discussion among themselves. The court posted the matter for further hearing next week.
Earlier in its affidavit, the Kerala Government said that Union Government accounts for approximately 60 per cent of the total debt or outstanding liabilities of India. In an affidavit, the Kerala Government said that Union can’t control the debt of state and the justification put forth by the Union Government to control the borrowings of the Kerala State are fallacious, exaggerated and unjustified.
Responding to the notes filed by the Attorney General, Kerala Government made submission and said, “The Union Government accounts for approximately 60 per cent of the total debt or outstanding liabilities of India. All the states put together account for the rest (approximately) 40 per cent of the total debt of the country. In fact, the Plaintiff State accounts for a miniscule 1.70-1.75 per cent of the total debt of the Union and the States put together for the period 2019-2023.”
Kerala’s financial health and debt situation have attracted adverse observations from successive Finance Commissions (12th, 14th and 15th) as well as the CAG and it is one of the most financially unhealthy states as its fiscal edifice has been diagnosed with several cracks, Attorney General said in a note submitted before the Supreme Court.
Responding to Kerala’s government suit, the Union in its affidavit, apprised the Supreme Court that Kerala has been one of the most financially unhealthy states, and its fiscal edifice of Kerala has been diagnosed with several cracks.
The Attorney General for India has filed a written note in the suit filed by Kerala Government where he said that debt of states affects the credit rating of the country.
The note was filed in response to the Kerala Government petition against Union’s alleged interference in states’ finances and said that due to such interference the State is not able to fulfil the commitments in its annual budgets.
In a suit filed by Kerala Government, it stated that State Government deals with the executive power conferred on the Plaintiff State under Article 293 of the Constitution of India to borrow on the security or guarantee of the Consolidated Fund of the State in alignment with the fiscal autonomy of the Plaintiff State as guaranteed and enshrined in the Constitution.
Kerala Government, through its petition, said Union through the Ministry of Finance (Public Finance-State Division), Department of Expenditure letters dated March 2023 & August 2023 and by amendments made to Section 4 of the Fiscal Responsibility and
Budget Management Act, of 2003 sought to interfere with the finances of the State by imposing a net borrowing ceiling on the State. The Kerala Government said that such interference with the finances of the State was caused by imposing a net borrowing ceiling on the plaintiff state in the manner deemed fit by the defendant union, which limits borrowings from all sources, including open market borrowings.
(with inputs from ANI)
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