No relief to Kerala in borrowing limit case, SC refers matter to constitutional bench

livemint.com:

suit against the Centre under Article 131 of the Constitution, contesting the Union's norms on borrowing limits and highlighting the unique financial landscape of the state. The bench, comprising justices Surya Kant and K.V. Viswanathan, today said the Centre had already agreed to provide around ₹13,000 crore to the state government for financial assistance.

The court accepted the Union government's argument that if a state overutilizes its borrowing powers in a fiscal year, there could be a corresponding reduction in the following years. The bench referred the case to the five-judge constitutional bench to address broader questions involving the interpretation of Article 131 and 293 of the Constitution. Under Article 131, the SC has jurisdiction over legal issues originating between the Centre and states, while Article 293 grants states the power for external borrowing and the extent to which the Union can regulate it.

Additionally, the scope of judicial review concerning fiscal policy will be examined by the larger bench. Since Article 293 has not been authoritatively interpreted before, the bench deemed it appropriate to refer the matter to a five-judge bench for further consideration. A top court bench had reserved the verdict on 22 March following an extensive hearing that spanned over two consecutive days.

Both Kerala and the Union government urged the court to pass an interim order in the case before the conclusion of the current financial year on 31 March after several rounds of talks failed to yield an agreement. Kerala had initially requested the Centre's approval to borrow ₹19,351 crore. While the Centre had agreed to allow an additional borrowing of ₹13,608 crores, it insisted that Kerala withdraw the legal