New Delhi: The Kerala government has moved the Supreme Court against the Union government, over the fact that it has imposed limits on the former’s borrowing capacity.
LiveLaw has reported that the original suit was filed under Article 131 of the constitution which gives the Supreme Court original jurisdiction to settle disputes between a state government and the Union government.
The Kerala government has said that the Union government’s move to lower its borrowing capacity will push it to grave financial crisis. Such borrowings are regulated by the Kerala Fiscal Responsibility Act, 2003.
The state has thus challenged letters issued by the Union finance ministry on March 27 and August 11, along with the amendments made to Section 4 of the Fiscal Responsibility and Budget Management Act, 2003 through the Finance Act, 2018, noting that it meddles with the Kerala government’s rights to borrow from available sources, including open market borrowings.
The Kerala government has also argued that the Union government has further curtailed its borrowing powers by pushing under the “borrowings” definitions actions which are not seen as such by the Article 293 of the constitution.
The Kerala government has posited in its suit that around Rs 26,000 crores is imminently and urgently required for it to avert an impending financial crisis.
“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. If the State is not able to borrow to the extent required based on the budget of the State, the State would not be able to complete its State Plans for the particular financial year. Therefore, it is essential for the progress, prosperity and development of the State and the people of the State that the State is able to exercise its constitutional rights and its borrowings are not impeded in any manner” the plea says, according to LiveLaw.
The Narendra Modi government’s moves to ostensibly erode states’ fiscal autonomy has been commented upon by economists and experts at various points. Among controversial decisions is a legal loophole to deny the states their share of tax revenues.