During a hearing at the Supreme Court, the Centre revealed on Thursday that the Kerala government has consistently surpassed its borrowing limits in recent years, raising concerns about the state’s financial stability. The disclosure occurred within the context of Kerala’s case concerning the imposition of a cap on net borrowing.
In response to the Centre’s assertion, the Kerala government rejected the notion of financial instability, claiming that its fiscal situation is robust enough to accommodate the excess borrowing from previous years. Representing Kerala, senior advocate Kapil Sibal argued that states possess the constitutional authority to manage their budgets and expenditures, emphasizing the sustainability of Kerala’s financial position despite previous overborrowing.
Conversely, the Centre, represented by Additional Solicitor General N Venkataraman, contested Kerala’s claims, presenting statistical evidence to demonstrate the state’s overborrowing trend. Venkataraman urged the court to consider Kerala’s financial parameters while deliberating on interim relief. The court’s proceedings on the matter are set to continue, with arguments scheduled for the following day.
Earlier, on March 13, the Centre had proposed a special allocation of Rs 5,000 crore to Kerala to address its financial challenges, subject to specific conditions. However, Kerala deemed this amount inadequate, insisting that a minimum of Rs 10,000 crore was necessary to meet its requirements.
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