Supreme Court Disapproves Centre’s Condition for Kerala’s Additional Borrowing

Supreme Court Disapproves Centre’s Condition for Kerala’s Additional Borrowing

The Supreme Court addressed a dispute between the Centre and the Kerala Government regarding the latter’s right to additional borrowing, highlighting the constitutional aspect under Article 131.

Court’s Disapproval of Centre’s Condition

The Supreme Court, led by Justice Surya Kant, expressed disapproval towards the Centre’s insistence on the withdrawal of a suit filed by the Kerala Government as a prerequisite for allowing additional borrowing.

Constitutional Right Under Article 131

The Court emphasized that withdrawal of the suit couldn’t be demanded by the Centre as it’s within Kerala’s constitutional right under Article 131, which deals with the Supreme Court’s original jurisdiction in disputes involving the Centre and states.

Possible Conditions for Improved Fiscal Management

While disapproving the withdrawal condition, the Court suggested that the Centre could impose other conditions for enhanced fiscal management.

Economic Recognition of India

The Bench lauded India’s robust economic standing globally, stressing that the economy’s strength is based on factual data rather than mere perception.

Concerns Over Fiscal Mismanagement

The Court urged both the Centre and the Kerala Government to address concerns regarding fiscal mismanagement, highlighting its impact on the national economy.

Need for Dialogue and Resolution

Emphasizing the importance of continuous dialogue, the Court urged senior officials from both sides to resolve the issue despite the pending suit.

Future Hearing and Liberty to Parties

The Court didn’t schedule a date for further hearings but granted the parties liberty to mention it for a hearing as required.

Kerala Government’s Accusations

The Kerala Government accused the Centre of interfering with its fiscal autonomy by imposing borrowing ceilings, stating that cooperative federalism hasn’t been upheld.

Proposed Solution and Further Discussions

The Court suggested immediate discussions regarding Kerala’s additional borrowing demands and the release of funds, aiming for resolution.

Original Suit and Centre’s Response

The Kerala Government filed an original suit under Article 131, asserting fiscal autonomy, while the Centre argued that uncontrolled borrowing by states could impact the country’s credit rating.

Multiple Choice Questions (MCQs):

  1. What constitutional provision did the Supreme Court reference regarding the dispute between the Centre and the Kerala Government?
    a) Article 356
    b) Article 131
    c) Article 370
    d) Article 134
    Answer: b) Article 131
  2. What condition did the Supreme Court disapprove of, imposed by the Centre for Kerala’s additional borrowing?
    a) Reduction of fiscal deficit
    b) Withdrawal of a suit
    c) Increase in taxation
    d) Privatization of state assets
    Answer: b) Withdrawal of a suit
  3. What was the Supreme Court’s suggestion regarding the Centre’s concerns over fiscal mismanagement by states?
    a) Immediate imposition of penalties
    b) Continuous dialogue and resolution
    c) Centralization of financial powers
    d) Reduction of state autonomy
    Answer: b) Continuous dialogue and resolution