The Central Government has informed the Supreme Court about the possibility of providing Kerala with a one-time financial assistance of Rs 5,000 crores in the current fiscal year, subject to certain conditions. This announcement came during a hearing where Additional Solicitor General N Venkataraman conveyed the Centre’s readiness to comply with the court’s suggestion regarding financial aid to the state.
However, Senior Advocate Kapil Sibal, representing Kerala, expressed disagreement with the proposal, arguing that it was based on the presumption that the state wasn’t entitled to additional borrowing and that the proposed amount wouldn’t suffice.
The Supreme Court adjourned the matter until March 21 to deliberate further on interim relief, emphasizing the complexity of the issue and suggesting negotiations between the parties.
Earlier directives from the Supreme Court had urged the Kerala government to engage in discussions with both central and state officials to address the financial challenges faced by the state.
In response to the ongoing legal dispute, the Kerala government highlighted its concerns regarding alleged interference by the Centre in the state’s financial matters. The state argued that such interference, including the imposition of borrowing ceilings, infringes upon its fiscal autonomy guaranteed by the Constitution.
The Attorney General for India, in a written note submitted to the court, emphasized the adverse financial situation of Kerala, attributing it to various factors including excessive borrowing and fiscal mismanagement. Additionally, the note underscored the impact of states’ debts on the country’s credit rating.