homeindia NewsSC observes 'trust deficit' between Kerala and Centre, nudges them to resolve deadlock over net borrowing
SC observes 'trust deficit' between Kerala and Centre, nudges them to resolve deadlock over net borrowing
The state has cited a financial "emergency". It has claimed that states have their fiscal responsibility framework which cannot be overridden by the Centre. Kerala had moved the apex court to challenge the Centre's cap on net borrowing.
The Supreme Court on Wednesday, March 6, said there is a "trust deficit" between Centre and Kerala and they should resolve the deadlock over the borrowing limit through a meeting today.
The state has cited a financial "emergency". It has claimed that states have their fiscal responsibility framework which cannot be overridden by the Centre. Kerala had moved the apex court to challenge the Centre's cap on net borrowing.
The Centre, on the other hand, submitted that it is batting for fiscal prudence against reckless borrowing citing the impact on national finances and credit ratings. The Centre has claimed that borrowing limits are placed based on the recommendation of the Finance Commission based on the Fiscal Responsibility and Budget Management (FRBM) Act.
The top court observed that state governments are under so much pressure of populism and freebies that the Centre's conditions may help them. The court has also advised politicians to not make public statements.
The Pinyari Vijayan government has claimed that the Centre is violating exclusive autonomous, plenary powers of the state government and termed the borrowing cap as "arbitrary".
After several rounds of meetings in February, the Centre had allowed borrowing of ₹13,000 crore on the condition that the state would withdraw its plea from the court. Kerala has claimed that it is entitled, like other states, to the ₹13,000 crore borrowing and has sought additional borrowing of ₹15,000 crore.
First Published: Mar 6, 2024 1:23 PM IST
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