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SC rejects Kerala's plea on interim relief on borrowing limits

By Jhanak Sharma      01 April, 2024 03:16 PM      0 Comments
SC rejects Keralas plea on interim relief on borrowing limits

NEW DELHI: The Supreme Court on Monday rejected the Kerala government's plea for directing the Union government to relax its borrowing cap in order to let the state may borrow additional funds during the current fiscal year.

A bench of Justices Surya Kant and K V Vishwanathan referred the original suit filed by the Kerala government to a Constitution bench.

The bench said issues to be adjudicated by the Constitution bench included interpretation of Art 292 and 293, pertaining to the borrowing powers of Union and states and the scope of judicial review.

Pronouncing the interim order, the bench accepted the Union government's contention that when there is over utilisation of borrowing limits by the state government, there can be substantial reduction for it in subsequent year.

The court declined any ad interim relief to Kerala in an original suit filed under Article 131 of the Constitution as the Centre had made additional provisions for Rs 13,608 Cr for it.

In the suit, the Kerala government contended that imposition of a Net Borrowing Ceiling as deemed by the Union government limits borrowings from all sources including the open market and thus curtails the exclusive constitutional powers of the state.

The suit claimed that as on October 31, 2023, a sum of Rs 26,226 crores is imminently and urgently required in order for the plaintiff state to avert the impending grave financial crisis that has been caused by the impugned orders.

The suit said that the ability to determine the borrowing of the State in order to balance the budget and make up the fiscal deficit is exclusively within the domain of the states.

On March 22, the court had reserved its order on the plea filed by Kerala government seeking interim relief against the ceiling on the states net borrowing.



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