New Delhi: The Supreme Court has directed the Kerala government to engage in a meeting with both Centre and state officials to address the financial issues arising between them.
This direction from the bench of Justices Surya Kant and KV Vishwanathan came while hearing a plea from the Kerala government highlighting the severe financial crisis faced by the coastal state.
The court emphasized that the meeting must be conducted promptly to resolve the dispute and cautioned against bringing politics into the matter. It remarked on India's robust and globally recognized economy.
In its affidavit, the Kerala government stated that the central government accounts for approximately 60% of India's total debt. The Kerala government argued against the Union Government's attempt to control the state's borrowings, considering it fallacious, exaggerated, and unjustified.
Responding to the Attorney General's notes, the Kerala government highlighted that it accounts for a small percentage (1.70-1.75%) of the total debt of the center and states combined for the period 2019-2023. According to the Centre, Kerala's financial health and debt situation have drawn adverse observations from various Finance Commissions and the CAG, making it one of the financially unhealthy states.
"The central government accounts for approximately 60% of the total debt or outstanding liabilities of India. All the states put together account for the rest (approximately) 40% of the total debt of the country. In fact, the Plaintiff State accounts for a miniscule 1.70-1.75% of the total debt of the centre and the states put together for the period 2019-2023," read the submission.
The center, in its affidavit, informed the Supreme Court that Kerala has been identified as one of the most financially unhealthy states with several fiscal challenges. The Attorney General noted that the debt of states significantly impacts the country's credit rating.
The Kerala government, in its suit, argued that the interference from the center in the state's finances, including imposing a net borrowing ceiling, infringes upon the fiscal autonomy guaranteed by the Constitution. The Kerala government accused the Union Government of limiting the state's borrowings from all sources, including open market borrowings.