Kerala and Centre to engage in dialogue over funds allocation, SC defers case to Feb 19

Kerala and Centre to discuss funds allocation

The Supreme Court was on February 13 informed that the Central government is willing to engage in a dialogue with the representatives from Kerala government on funds allocation.

The apex court on hearing this statement from Attorney General (AG) Venkatramani deferred the hearing of the case to February 19 to be apprised of the outcome of the discussion.

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.

The plea furthermore alleged that over a period of the next five years , the net negative impact or loss sustained by Kerala's economy could be as high as Rs 2 lakh crore to Rs 3 lakh crore, reckoned with 2016-17 as the base year. It further alleged that this number  represents 20 percent-30 percent of the state's current Gross Domestic Product over a six-year period.

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.