Supreme Court Directs Kerala, Centre To Resolve Fund-Allocation Dispute
In case the talks fail, the top court has granted both parties the liberty to mention the matter again.
The Supreme Court asked the Kerala and the Union governments on Wednesday to resolve their fund-allocation dispute via an administrative meeting.
The top court said the two sides could meet in the evening and settle the dispute, based on the strength of the relationship between the union and the states.
The central government can place conditions on Kerala before acceding to its demands. However, it cannot impose the condition to withdraw the suit, a bench of Justices Surya Kant and KV Viswanathan said.
Appearing for the state government, senior advocate Kapil Sibal argued that there was a state of emergency and that funds were required to pay salaries and pensions.
The bench asked the state to take the Rs 13,608 crore that the central government was offering and make a case for additional demand of Rs 15,000 crore in the meeting itself.
Don't deliberate on the issues thinking that a suit is pending, it said, giving both parties the liberty to mention the matter before the apex court in case the dialogue fails again.
During the last hearing, the court was told that negotiations had come to a standstill and that it would have to hear the matter.
The case pertains to a plea filed by the Kerala against the central government, accusing it of imposing a net borrowing ceiling, which limits the state's borrowings from all sources, including open-market borrowings.
It has been argued that in order to meet the fiscal deficit, states regularly plan their borrowing requirements and the ability to determine the borrowing of the state in order to balance the budget and make up for the fiscal deficit is exclusively within the domain of the states.
According to the plea, the reduction in borrowing limits will have an extremely deleterious impact and cause long-term economic damage to the state, which will be irremediable in the short or even medium term.
The state has suffered a cumulative expenditure loss or resource deficiency of nearly Rs 1.07 lakh crore during fiscal 2016–23, according to the plea.
It is estimated that over a period of the next five years, the net negative impact on Kerala's economy could be as high as Rs 2–3 lakh crore, with FY16–17 as the base year. This represents 20–30% of Kerala's current gross domestic product over a six-year period, it said.
