A view of the Supreme Court of India in New Delhi. File
| Photo Credit: R.V. Moorthy
The Centre has advised the Supreme Court that Kerala was “one of the most financially unhealthy States” and money owed run by States have an effect on the credit standing of the complete nation.
A word submitted by Attorney General R. Venkataramani in the apex court docket mentioned the “fiscal edifice of Kerala has been diagnosed with several cracks”.
The Centre mentioned the poor monetary indicators of Kerala level to a “lack of proper management of its public finances”.
The Union authorities mentioned “substantial financial resources” had been supplied to the Kerala authorities from 2020-21 to 2023-24 over and above the quantity advisable by the 15th Finance Commission. One of these was the fee of ₹14,505 crore as “back-to-back loan to meet GST compensation shortfall”.
“Despite the devolution of substantial resources from central taxes and duties, highest share of post-devolution revenue deficit grant, financial support over and above the Finance Commission’s recommendations and transfer of funds under centrally sponsored schemes, any financial stress that the Kerala government is facing is purely due to its own financial mismanagement,” the Centre mentioned in the 46-page word.
The Centre mentioned a State that indulged in “reckless borrowing to finance unproductive expenditure and poorly targetted subsidies” was courting bother. “Increase in State debts as a consequence of high borrowing will reduce availability of development funds, impoverishment of people and loss of State income, hence, also the loss of national income.”
The word is a response to an unique go well with filed by the State of Kerala towards the Centre for violating the federal construction of governance and inflicting “severe damage to the economy of a small State with meagre resources”.
The State urged the court docket to guard the federal system of governance in which the State has the unique energy to control its funds by means of the preparation and administration of its finances and borrowings. Kerala mentioned latest actions, like imposing a Net Borrowing Ceiling in an arbitrary method, had been calculated to scale back it to a “state of penury”.
In response, the Centre referred to a few Finance Commission reviews which had highlighted the deteriorating debt scenario of the State.
“The Reserve Bank of India has also categorised Kerala among the five highly stressed States with high indebtedness requiring urgent corrective measures. The report said Kerala, Rajasthan and West Bengal are projected to exceed the debt-GSDP (Gross State Domestic Product) ratio of 35% by 2026-27,” the Centre submitted.