Supreme Court has referred the suit filed by the Kerala government regarding the ceiling on net borrowing to a five-judge Constitution bench.(Image: DC)
New Delhi: The Supreme Court has referred the suit filed by the Kerala government regarding the ceiling on net borrowing to a five-judge Constitution bench. The bench, comprising justices Surya Kant and K. V. Viswanathan, passed the order in response to the Kerala government's accusation against the Centre of interfering with its financial autonomy. The suit challenges the Centre's imposition of a borrowing cap, citing the state's exclusive powers to regulate finances.
The bench highlighted Article 293 of the Constitution, which deals with state borrowing, noting the lack of authoritative interpretation by the apex court. It posed several questions for the larger bench to address, including whether states have an enforceable right to borrow from the Union government. The court acknowledged that substantial relief had been granted to Kerala pending further deliberation.
The suit raises significant constitutional questions, including the scope of judicial review concerning fiscal policy. The bench directed the matter to be placed before the Chief Justice of India for the constitution of a larger bench. Filed under Article 131 of the Constitution, the suit underscores states' fiscal autonomy and their ability to regulate finances.
During arguments, the Centre expressed concerns about Kerala's borrowing practices, while the state defended its financial sustainability. Despite the Centre's offer to allow borrowing up to Rs 5,000 crore, subject to conditions, Kerala insisted on a minimum of Rs 10,000 crore. The apex court emphasised the need for dialogue between the Centre and states to resolve the issue promptly.
( Source : Deccan Chronicle )
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