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"They (Union) can give as much money to NHAI and not include it in their fiscal deficit, but for us they will include it in the fiscal deficit..this is not right..", court was told today
The Kerala government today submitted before the Supreme Court of India that it was in a state of emergency with regard to its financial conditions.
When the division bench enquired about the emergent situation, Senior Advocate Kapil Sibal informed the bench that it had to pay salaries which could not be done out of the public funds.
A bench of Justices Surya Kant and KV Vishwanathan accordingly asked the Union of India to consider how much of financial assistance it could provide to the state.
"You have a meeting today on the exceeding amount with all conditions in place..except withdrawal of suit..because of the suit the dialogue must not stop..", the bench directed asking for a meeting to be held today at 4.30 PM.
Notably, the Centre had agreed to help Kerala out on the condition that it withdraws the instant suit.
Two weeks back, Court was informed by Attorney General R Venkataramani that Central Government was open to talks with the Kerala government on the issue of Borrowing Ceiling imposed on the State by the Centre. Kerala government had then also agreed to send a delegation to have a face-to-face with representatives of the central government.
AG had recently filed a note in the State of Kerala's plea against the Union government's alleged interference with its finances.
In said note Supreme Court has been told that Kerala has been one of the most financially unhealthy states whose fiscal edifice has been diagnosed with several cracks. "The 15th Finance Commission designated Kerala to be a “highly debt stressed” State. It observed that Kerala had largely failed to limit its fiscal deficit to 3% of GSDP for almost all of the past decade....The Reserve Bank of India has also categorized Kerala among the five highly stressed States with high indebtedness requiring urgent corrective measures...", the note states.
Court has been further informed that an analysis of financial situation of Kerala has revealed that the State still has poor financial indicators pointing towards a lack of proper management of its public finances.
A division bench of Justices Surya Kant and KV Vishwanathan had issued notice in said plea on January 12, 2024.
Kerala has submitted that the Union has imposed a Net Borrowing Ceiling on the State in the manner deemed fit by it, which limits borrowings from all sources including open market borrowings and by further reducing the Net Borrowing Ceiling by including aspects into the “borrowing” of the State which, otherwise, are not “borrowings” as contemplated under Article 293 of the Constitution.
"If the State is not able to borrow to the extent required based on the budget of the State, the State would not be able to complete its State Plans for the particular financial year. Therefore, it is essential for the progress, prosperity and development of the State and the people of the State that the State is able to exercise its constitutional rights and its borrowings are not impeded in any manner...", the suit states.
Case Title: State of Kerala vs. Union of India
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