Kerala

Rescuing Kerala: Supreme Court’s Lifeline Amid Financial Crisis

How the Supreme Court Decision Provides Relief in Kerala's Financial Turmoil

The Supreme Court’s recent decision has brought much-needed relief for Kerala, grappling with a severe financial crisis. The court ordered the Center to sanction an additional Rs. 13,600 crore for borrowing, providing a lifeline to the state.

Dire Financial Situation

During the Supreme Court proceedings, Kerala explained its dire financial situation, stating its inability to pay even pensions and salaries. In response, the court has permitted Kerala to borrow more funds.

Moreover, it will facilitate the state’s disbursement of social welfare pensions due for long months. Kerala’s plea before the Supreme Court against the Center, requesting support for its financial difficulties.

The Supreme Court’s decision will relieve Kerala’s salary crisis. Initially, Kerala had proposed borrowing Rs. 26,000 crore. Still, while the case was pending, the Center granted permission to borrow Rs. 13,600 crore. Kerala accepted this amount, but Advocate Kapil Sibal, representing the state, argued that an additional Rs. 15,000 crore would be needed. The court then directed the Center and Kerala to discuss the remaining amount.

The Center had initially asked the Supreme Court not to interfere with the borrowing limit. However, the court stated that it would take time to settle all the demands in Kerala’s petition and would examine the extent of its intervention in this matter.

During the discussions, the Center clarified that Kerala’s fiscal deficit cannot be compared to the Center’s, as they are distinct entities. The Center adopted a positive stance in the discussions and justified the option for Kerala to withdraw the plea. Justice K.V. Viswanathan criticized this suggestion.

Kerala’s Financial Plea

Kerala has stated in the Supreme Court that it is facing a severe financial crisis, with insufficient funds to pay pensions, dearness allowances and other benefits. The state also informed the court that it only has enough money to pay salaries and is in overdraft.

Acknowledging Kerala’s economic crisis, the court observed that every state has the right to file a petition. The state is eligible to borrow Rs. 13,608 crore before the end of the current financial year on March 31. The Supreme Court also directed the Center to grant immediate permission to the state government to borrow this amount.

Initially, the Center’s stance was that the state could be authorized to borrow this amount only if the petition filed in the Supreme Court was withdrawn. However, the Supreme Court criticized this position. The court also directed Kerala and the Centre to discuss borrowing the additional amount favouring Kerala.

Kerala claims in the court that the Center was pressuring its financial situation by imposing borrowing restrictions. The Supreme Court emphasized that the issue should be settled amicably by mutual discussion in the days before the case was considered. The Justice Suryakant-led panel also stressed the boundaries of the Supreme Court’s authority to intervene in financial problems.

Critical Relief for Kerala

The state of Kerala has received much-needed respite from its financial turmoil thanks to the Supreme Court’s decision. Through its directive to the Center to approve higher borrowing limits, the court has ensured Kerala can continue to meet its financial commitments, such as providing pensions and salaries.

Rohit Sharma

Rohit Sharma is a seasoned Political Journalist with a deep passion for Indian Politics. With over a decade of experience in the field, he has established himself as a trusted… More »

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