New Dehli- A heated debate erupted in the Supreme Court Thursday as Kerala challenged the Center's borrowing limit restrictions, seeking urgent interim relief. The state, facing mounting arrears and obligations, claimed the Center's "arbitrary" measures threaten its fiscal stability and violate federal principles.**
Kerala's petition, filed under Article 131, accuses the Center of impeding its financial autonomy and causing "severe economic damage" through a restrictive Net Borrowing Ceiling (NBC). Senior advocate Kapil Sibal, representing the state, pressed for an immediate decision on their interim application, highlighting the looming March 31 deadline for financial settlements and budget presentation.
However, Attorney General R. Venkataramani fiercely contested Kerala's plea, dismissing it as an attempt to "mask its failures" and avoid fiscal responsibility. He argued that the state's financial woes stemmed from internal mismanagement, not the Center's policies. Pointing out that other states manage their finances without exceeding the NBC, he questioned Kerala's exceptional demands.**
Venkataramani further challenged the maintainability of the petition itself, claiming it had no direct connection to the budget and that addressing the interim application before the full suit would provide an incomplete picture. He insisted on a comprehensive examination of the entire case, including the broader questions of national economic management policy.
Kerala, in its petition, asserts its exclusive constitutional power to manage its finances and borrowing, emphasizing the principle of "fiscal federalism." It contends that the Center's recent amendments to the Fiscal Responsibility and Budget Management Act encroach upon this right and violate the Seventh Schedule of the Constitution. The state accuses the Center of crippling its ability to manage its public debt, enterprises, and budget independently.
The Supreme Court has yet to make a pronouncement on the matter. The heated exchange in court highlights the deep divide between the Center and Kerala over fiscal control and underscores the potential implications for the state's financial future. Whether the Court grants Kerala's plea for interim relief and delves into the larger questions of federalism and borrowing autonomy remains to be seen.
