SC reluctant to interfere in Kerala's borrowing limit dispute with Centre
₹24,000 crore, with ₹11,000 crore being the entitlement, but the Centre insisted on withdrawal of the suit for even considering this amount. He said while all states in India had been receiving ₹5,000 crore for power sector reforms, Kerala was denied this allocation due to the lawsuit. Sibal said Kerala was over-borrowing due to investments in education and health, but the state was penalized for its growth in human development indices.
Additional solicitor general N. Venkataraman, representing the union government, said the offers made during negotiations were in the spirit of federalism, mentioning an offer of ₹13,608 crore straight away but conditioned on Kerala withdrawing the legal suit. Venkataraman said Kerala's borrowing limit had exceeded by over 20% and it needed to meet terms and conditions for its power sector reforms.
He advocated for negotiation and compliance with conditions rather than litigation. The suit filed by the Kerala government contended that the finance ministry had imposed a net borrowing ceiling on the state and restricted its borrowings from all sources, including the open market. In response, the Centre said any financial stress faced by the state was due to mismanagement.
According to the Union government, "substantial financial resources" had been provided to the Kerala government from 2020-21 to 2023-24 over and above the amount recommended by the 15th Finance Commission. One of these was the payment of ₹14,505 crore as a "back-to-back loan to meet GST compensation shortfall". The Centre said public finance management being a national issue has a bearing on the credit rating of the country.
Read more on livemint.com
