In a crucial development, the Supreme Court instructed the Centre to submit a response regarding the Kerala government’s urgent plea for the immediate release of funds. The bench, comprising justices Surya Kant and KV Viswanathan, scheduled further hearings for February 13. The plea for interim relief is part of the ongoing petition filed by the Kerala government against the alleged interference by the Centre in the state’s finances, contending that such interference impedes the fulfillment of annual budget commitments.
Senior advocate Kapil Sibal, representing the Kerala government, emphasized the urgency of the situation, citing the need for funds to pay state employees. In response, Attorney General R Venkatramani, representing the Centre, countered the urgency plea, stating that there is no immediate need.
The suit filed by the Kerala government asserts that the Centre, through various actions, has sought to interfere with the state’s finances, particularly by imposing a Net Borrowing Ceiling. The government contends that such interference limits borrowings, impacting the state’s ability to meet financial commitments outlined in its annual budgets.
The Kerala government argued that the Centre’s interference has resulted in accumulating arrears, affecting welfare schemes, payments to employees and pensioners, and dues to state-owned enterprises. The government specified a pressing need for Rs 26,226 crores as of October 31, 2023, to address the impending financial crisis caused by the alleged interference.
The suit contends that the Centre’s actions violate the principles of fiscal federalism outlined in the Constitution, creating unconstitutional limits on the state’s autonomous powers to regulate its finances. The Kerala government asserts that the suit raises a dispute over the Centre’s authority to interfere with the state’s exclusive powers in financial regulation as established by various constitutional provisions.