Centre and Kerala to battle funds allocation issue in SC as dialogue yields no result

SC to hear Kerala's plea against centre on March 6

The Supreme Court was on February 19 informed that the dialogue between central government and the representatives of the Kerala government over financial allocation yielded no result.

As a result of this, the Kerala government has decided to pursue its case against the central government at the Supreme Court. The SC has agreed to hear the case at length on March 6 and 7.

On February 13, the SC was informed by the centre that it is willing to engage in a dialogue with the representatives from Kerala government on funds allocation. The top court accordingly deferred the hearing by a week to make way for the dialogue. 

The above transpired in a plea filed by the Kerala government at the Supreme Court, asking it to intervene in the dispute. The Left government in Kerala, which has been blaming the Centre for the state's financial woes, had in its Budget attacked the Union government stating that it was pushing the southern state towards the worst financial crisis in its history.

In its plea, Kerala government had alleged that the central government was interfering with the State's finances by arbitrarily  imposing a net borrowing ceiling, thereby limiting borrowings from all sources including
open market borrowings. It furthermore alleged that the centre is reducing the net borrowing ceiling by including aspects into the “borrowing” of the state, which are normally considered borrowings under the constitution.

"The present suit squarely raises a dispute as to the right, power and
authority of the Defendant Union to interfere with the exclusive, autonomous and plenary powers of the State to regulate its own finances under several provisions of the Constitution," the plea said.

According to the plea, "This is a loss which will cause severe
damage to the economy of a small state like Kerala. If the damage is not prevented, the Plaintiff State, with its meagre resources, will not be able to recover from this for decades."

Attorney General Venkatramani, in his written note to the Supreme Court contended that Kerala is one of the most financially unhealthy states in the country. He further alleged that  Kerala's public finance management is a national issue.