The Supreme Court has stated that the state has got substantial relief. The dispute between the two sides reached the top court in December after talks failed to yield results. A bench of justices Surya Kant and KV Viswanathan heard the two sides after Kerala rejected an offer by the Centre, allowing it an advanced and additional borrowing space of Rs.5,000 crores in the current fiscal on the grounds that it is insufficient. The first offer was made in Feb 2024. Kerala sought an advance borrowing of Rs.15,000 crores.
Timeline of the case
In its plea, Kerala alleged that the Centre was arbitrarily imposing a net borrowing ceiling, limiting the amount it could raise, leading to an urgent requirement of around Rs.26,000 crore to meet its financial obligations.
The LDF government has accused the union finance ministry of imposing a net borrowing ceiling in a manner that limits it from raising funds from all sources, including open market.
The Centre reduced the Net Borrowing Ceiling of the state by introducing aspects into the "borrowing", which otherwise are not considered "borrowings", it alleged.
The Centre said the Union has long relied on Articles 293 (3) and 294 (4) of the Constitution to control spending and borrowing by states. The limit is recommended by the Finance Commission based on a pre-approved formula.
According to the 15th Finance Commission's recommendations, the upper limit of states' borrowings can be set at 3.5% of their GSDP for FY24 and FY25. For the current fiscal year, 0.5% of the ceiling was linked to power sector reforms.
Courtesy. moneycontrol
My take
Kerala's case in the first place itself was a losing game! It's close to a Sri Lanka-like situation with regards to its fiscal health. It had better listen to the union government and follow prudent fiscal measures within the federal structure!
Tailpiece.
Got up at my usual time, the chores and was ready by a half past 10.
No change in outlook regarding Sanil's condition.
No television for the second day.
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