Recently, Senior Advocate Kapil Sibal paid of Rs 75 lakh for representing the Kerala government in a case regarding borrowing limits.
Thiruvananthapuram: Recently, In the Borrowing Limit case, the Kerala state government paid Rs 75 lakh as a fee to senior advocate Kapil Sibal, who represented the state in the Supreme Court. The Centre had imposed restrictions on Kerala’s borrowing due to the state’s financial extravagance, leading to Kerala challenging this decision in the Supreme Court with Kapil Sibal appearing on behalf of the state.
Following unsuccessful debt negotiations with the Center, Kerala is now facing a severe financial crisis. Advocate Kapil Sibal and Standing Counsel CK Shashi informed the Supreme Court that the state’s financial predicament cannot be resolved with just Rs 13,608 crore.
Background
The Supreme Court directed the Centre to consider extending a one-time financial package to the Kerala government before March 31 to address the state’s ongoing financial challenges.
Represented by senior advocate Kapil Sibal, the Kerala government sought an urgent hearing for its pending lawsuit against the central government, alleging that necessary funds were not being released by the Union.
A bench comprising Justice Surya Kant and KV Viswanathan emphasized the imposition of conditions in future budgets. In the interim, the bench recommended the provision of a special package to the state before the specified deadline.
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During the proceedings, Additional Solicitor General N Venkataraman, representing the Centre, acknowledged the cumulative impact of the offsetting balance on Kerala’s finances. He highlighted that the state had deferred fiscal consolidation twice. The offsetting balance refers to the minimum credit balance that a bank may require a borrower to maintain as a condition for granting a loan.
On March 6, the bench emphasized the Union government’s responsibility to address fiscal mismanagement by states as it directly affects the nation’s economy. The court advised both the Centre and the Kerala government to resolve their differences regarding a cap on net borrowing by the southern state.
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Meanwhile, the Centre has granted permission for Kerala to borrow Rs 8,700 crore out of the total eligible loan amount of Rs 13,608 crore. This loan was approved recently, and the borrowing is facilitated through Reserve Bank debentures, with auctions taking place every Tuesday.
