The Supreme Court has directed the Centre to file a response to Kerala Government’s interim application, urgently seeking funds as the financial year approaches its end in March. The bench, comprising Justices Surya Kant and KV Viswanathan, instructed the Attorney General, representing the Centre, to submit a reply on the interim application. The Kerala Government contends that due to the Centre’s alleged interference in the state’s finances, it is struggling to meet commitments in its Annual Budgets and urgently needs funds to pay employees.
- Urgent Funds Plea:
- The Kerala Government has filed an interim application seeking urgent release of funds as the financial year is nearing its conclusion in March.
- The state emphasizes the need for urgent orders, stating that funds are depleting, particularly for employee salaries.
- Attorney General R Venkataramani, representing the Centre, is directed to file a response to the interim application.
- Financial Crisis and Alleged Centre’s Interference:
- Kerala contends that the Centre’s interference in the state’s finances has led to a situation where the state is unable to fulfill commitments in its Annual Budgets.
- The state government has filed a suit challenging two letters issued by the Ministry of Finance and amendments to the Fiscal Responsibility and Budget Management Act.
- Kerala claims that the Centre has reduced its borrowing limit, potentially causing a severe financial crisis.
- Constitutional Rights and Borrowing Impediment:
- The state asserts that the ability to determine borrowing to balance the budget and address fiscal deficits is within the exclusive domain of the states.
- The suit highlights the essential nature of the state’s ability to borrow for the progress, prosperity, and development of the state and its people.
- Kerala argues that the Centre’s interference has resulted in arrears owed to welfare schemes, employees, pensioners, and state-owned enterprises.
- Plaintiff State’s Constitutional Rights:
- The suit raises a dispute regarding the Union’s right, power, and authority to interfere with the state’s exclusive, autonomous, and plenary powers to regulate its finances under the Constitution.
The Supreme Court’s intervention in response to Kerala’s urgent funds plea adds a significant legal dimension to the ongoing financial challenges faced by the state. The case brings attention to the broader issue of federal-state financial relations and the autonomy of states in managing their finances.
