Supreme Court Posts Kerala's Suit Against Centre Over Borrowing Curbs On Feb 13 To Consider Interim Relief Application

The State of Kerala moved the apex court last December, asserting that the Centre's actions were impinging on the state's ability to fulfill its commitments outlined in its annual budgets. The top court issued notice in this plea earlier in January, seeking the central government's response. The original suit filed under Article 131 was heard today by a bench of Justices Surya Kant and KV Viswanathan.

During the hearing today, Senior Advocate Kapil Sibal, representing the State of Kerala, stressed the urgency of the situation, citing the impending budget deadline on January 31. He requested an expedited response to prevent the suit from becoming infructuous. On the other side, Attorney General R Venkataramani, representing the central government, contested the urgency, asserting that the issues at hand fell under economic management policy. The state's urgency, he claimed, were nothing but an attempt to mask its own failures.

Ultimately, the bench directed the Centre to file a reply on the interim relief application within a week and for a rejoinder to be filed within three days thereafter. The matter is scheduled for further consideration on February 13.

The original suit, challenging the Ministry of Finance's directives and amendments to the Fiscal Responsibility and Budget Management Act, highlights the lowered borrowing limit imposed on the state, potentially precipitating a severe financial crisis. The Kerala government has contended that the state urgently requires around Rs 26,000 crore to meet its financial obligations. According to the suit, the state's exclusive authority to regulate its finances was being encroached upon by the Centre, leading to substantial arrears in welfare schemes and other commitments. The Pinarayi Vijayan-led government has underscored the imperative for the state to exercise its constitutional rights to borrow in alignment with its budgetary requirements, essential for the progress, prosperity, and development of the state.

State of Kerala v. Union of India | Original Suit No. 1 of 2024