On Monday (11th March): The Supreme Court has requested the Central government to provide Kerala with a one-time financial package to address the state’s current economic challenges
New Delhi: On Monday, March 11, the Supreme Court directed the Central government to extend a one-time financial relief package to Kerala to alleviate the state’s ongoing financial loss.
The bench, led by Justice Surya Kant and Justice KV Viswanathan, proposed that the package could be granted under stringent conditions. Justice Kant emphasized the need for flexibility in this one-time assistance while advocating for stricter terms in future allocations. He suggested that the special package could be disbursed before March 31, albeit with harsher conditions compared to those imposed on other states.
While acknowledging its limited expertise in financial matters, the Court urged both the central and state governments to collaborate and devise a viable solution to address Kerala’s fiscal challenges.
Justice Kant suggested
“That the central government could adopt a slightly lenient approach by providing a one-time special package, albeit with stricter conditions in future budgets. He recommended that the special package be granted to Kerala before March 31, but under more stringent terms compared to other states”.
He said that, “while being stringent with Kerala now, the government could consider a more lenient approach towards other states in the future”.
The case, brought forth by the Kerala Government, emphasized its contention that the central government’s restrictions on the state’s borrowing capacity have exacerbated its financial crisis, resulting in unpaid dues and potential salary delays for employees.
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Representing Kerala, Senior Advocate Kapil Sibal appeared before the Court, while Attorney General R Venkataramani and Additional Solicitor General N Venkataraman represented the Central government.
Following the Court’s suggestion, officials from both governments are expected to convene for further discussions before the next hearing.
In previous hearings, both parties had agreed to engage in dialogue to resolve financial discrepancies. Despite efforts to find common ground, Kerala’s immediate financial needs, including the release of Rs 19,000 crore owed by the Centre, remain unresolved.
The Additional Solicitor General (ASG) explained
that the transfer of funds would occur promptly upon confirmation from the Power Ministry that they had fulfilled their obligations. He clarified that, under the current scheme, a bailout package for Kerala is not feasible.
Furthermore, the Central Government asserted
That it cannot afford to provide Kerala with special treatment, emphasizing that Kerala’s situation does not warrant such consideration.
“The ASG highlighted that other states have been denied similar requests, noting significant disparities between Kerala’s bailout request and its actual expenditure package”.
The ASG emphasized
“That the Union government’s options are limited due to constraints. Nonetheless, he expressed willingness to explore solutions despite these challenges, affirming that they are not in conflict with Kerala”.
In response, the Attorney General (AG) suggested that Kerala explain to the court why it cannot meet its financial obligations. Meanwhile, the bench encouraged both parties to collaborate on finding an interim solution and proposed that the central government consider granting Kerala temporary concessions.
The Court urged both sides to seek an interim solution while encouraging the Central government to consider extending temporary concessions to Kerala amidst its financial turmoil.
Case Title: State of Kerala vs. Union of India.
