The Supreme Court on Tuesday urged the Centre to be a little liberal and suggested that it relax the borrowing limit for Kerala as a one-time package for the current financial year.
After hearing the Kerala government's plea, a two-judge bench of the top court, comprising Justice Surya Kant and KV Viswanathan, told the Centre that it could put more rigid conditions on the state for the next financial year.
The Kerala government informed through its senior lawyer Kapil Sibal that the negotiations between the state and Centre, which took place on the court's suggestion last week, failed. During the talks, the state had sought permission for additional borrowing to the tune of Rs 19,370 crore.
Last week, the Centre had refused Kerala's request to allow borrowing of Rs 19,351 crore.
Additional Solicitor General (ASG) and senior lawyer, N Venkataraman, speaking for the Centre, told the apex court that he would take instructions on the issue and apprise it by tomorrow.
He clarified that the Centre is always ready to help Kerala.
To this, the judges said the court did not ever doubt the bona fide intention of the Centre to help out the state.
Justice Surya Kant told Attorney General (AG) of India R Venkataramani and ASG Venkataraman, "What we are trying to impress upon you is, do something as a special measure", for Kerala.
The Kerala government, in its petition filed in the top court, had alleged that the Centre is unnecessarily interfering in its finances and submitted to the SC that due to such interference, the state is not able to fulfil the commitments in its annual budgets.
The Kerala government said in its petition filed before the SC that the Centre is imposing a net borrowing ceiling on the state.
The Kerala government said that the alleged interference by the Centre has resulted in huge arrears that it owes by way of welfare schemes to the people of the state particularly the poor and the vulnerable, various beneficiary groups, employees of the state government, its pensioners and dues to its state-owned enterprises.
On March 6, the court had directed the Centre to grant the state an additional borrowing worth Rs 13,608 crore. The Centre withheld the permission saying it would be released only if the state withdrew the suit. The court also criticised the Union government for laying out the conditions. Kerala’s original suit questions the curbs imposed by the Centre on borrowings by state governments. The suit filed under Article 131 said the Constitution has accorded fiscal autonomy to states. States regulate their finances under different articles. The cap on borrowings imposed by the Centre is unlawful, Kerala said.