Senior Advocate Kapil Sibal, representing the Kerala government, underscored that the borrowing restrictions imposed by the Central government were hampering the state’s capacity to disburse salaries.
Thank you for reading this post, don't forget to subscribe!
NEW DELHI: The Supreme Court of India has taken cognizance of a plea filed by the Kerala government, challenging the Central government’s alleged interference in the state’s financial autonomy. The Bench, comprising Justices Surya Kant and KV Viswanathan, issued a notice to the Union Government on January 12, 2024, in response to the suit brought forward by the State of Kerala.
The core of the dispute lies in the imposition of a Net Borrowing Ceiling by the Union government, as articulated in letters dated March 27, 2023, and August 11, 2023, issued by the Ministry of Finance (Public Finance-State Division), Department of Expenditure, Government of India. Additionally, the Kerala government has contested the amendments made to Section 4 of the Fiscal Responsibility and Budget Management Act, 2003, through the Finance Act, 2018.
ALSO READ: Bombay High Court | Bail Granted to the Man Arrested for MINOR RAPE
The Kerala government’s plea, filed in December, asserts that these actions by the Central government effectively seize control over the state’s budgeting process. This, according to the State, infringes upon its constitutional rights, as the ability to determine state borrowing to balance the budget and address fiscal deficits falls exclusively within the domain of state powers.
Senior Advocate Kapil Sibal, representing the State of Kerala, emphasized the gravity of the situation, pointing out that the imposed borrowing limits hinder the state’s ability to fulfill its commitments under the annual budgets. He highlighted that this inability to borrow as needed based on the state’s budget could derail the completion of state plans for the financial year, thereby impacting the progress, prosperity, and development of the state and its people.
The State government has reportedly suffered a cumulative expenditure loss or resource deficiency of ₹1,07,513.09 crore over the fiscal years 2016-2023 due to these actions by the Central government. This financial strain has impeded the state’s ability to meet its budgetary commitments, including essential expenditures like pension payments.
ALSO READ: DAY 2 | At the International Court of Justice(ICJ), South Africa VS Israel
During the hearing, Sibal requested that the court consider the plea for interim relief, given the state’s immediate financial obligations. The Bench responded by issuing notice in the State’s application for interim relief as well and scheduled the next hearing for January 25, 2024.
This case, raises critical questions concerning the constitutional powers of state governments in India, particularly in the realm of financial management and autonomy. The outcome of this legal battle is poised to have far-reaching implications for the federal structure and fiscal federalism in India.
CASE:
THE STATE OF KERALA V. UNION OF INDIA, ORGNL.SUIT No. 1/2024.
FOLLOW US ON YOUTUBE FOR MORE LEGAL UPDATES
