The Supreme Court has delivered a setback to the Pinarayi Vijayan-led government in Kerala by refusing to grant interim relief in the ongoing dispute over borrowing limits. On April 1, the apex court referred the state’s suit against the Union Government to a Constitution Bench, signalling a significant legal battle ahead.
The court’s decision came in response to Kerala’s plea for additional borrowing to address its financial crisis for the fiscal year 2023-24. However, the bench, comprising Justice Surya Kant and Justice KV Viswanath, declined to pass any interim orders, stating that the state had already received substantial aid from the Centre for the current fiscal year.
In its observations, the bench expressed a preliminary inclination towards the Union Government’s position, suggesting that Kerala had not adequately demonstrated the necessity of additional borrowing. The court underscored that granting interim relief could exacerbate the state’s fiscal challenges, particularly considering its past violations of fiscal rules and inefficient fiscal management.
The refusal of interim relief deals a blow to Kerala’s efforts to secure additional financial resources to navigate its economic difficulties. The state’s inability to convince the court of its right to borrow further underscores the complexity of the legal and financial issues at hand.
. The court’s decision, which accepted the government’s argument regarding borrowing limits set by Finance Commissions, reinforces the Centre’s authority in financial matters.
The dispute, centered around Article 293 of the Constitution, has now been referred to a Constitution Bench for a final decision. While Kerala’s Finance Minister attempted to downplay the setback by claiming the court’s acknowledgment of the state’s suit, the ruling underscores the consequences of Kerala’s past fiscal mismanagement.
The apex court’s verdict holds Kerala accountable for its additional borrowing between 2016 and 2020, allowing the Union Government to reduce future borrowing limits accordingly. This ruling exposes the inefficiencies and corruption within Kerala’s fiscal policies, contradicting the narrative propagated by Chief Minister Pinarayi Vijayan and his Left Democratic Front (LDF) government.
Union Finance Minister Nirmala Sitharaman’s scrutiny of Kerala’s financial practices has been validated by the Supreme Court, debunking claims of discriminatory treatment by the Centre. The ruling reaffirms the Union Government’s authority in financial matters and highlights the need for responsible fiscal management by state governments.
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