Open to dialogue with Kerala to resolve dispute over cap on net borrowing: Centre tells SC

NEW DELHI: With the Left Democratic Front (LDF) government in Kerala accusing the Centre of interfering in the state’s finances by imposing a ceiling on net borrowing, the Centre told the Supreme Court on Tuesday it is open to discussion with the southern state to resolve the dispute.

Attorney General R Venkataramani told a bench of Justices Surya Kant and K V Viswanathan that the Union of India is agreeable to holding a meeting with Kerala on the issue.

“The suggestion falling from the court has received the highest regard that it deserves. The government is open to a meeting. Let’s keep it open without any conditions. There can be an open dialogue,” Venkataramani said.

Senior advocate Kapil Sibal, appearing for Kerala, said the state government has also agreed to send a delegation to the national capital on Wednesday for talks with the Centre.

The development came after the top court asked Venkataramani to seek instructions if the finance secretary of the state can meet the union finance minister and resolve the issue through negotiation.

The court then posted the matter for February 19 for directions. The Kerala government has approached the Supreme Court accusing the Centre of interfering in the exercise of its “exclusive, autonomous and plenary powers” to regulate the state’s finances by imposing a ceiling on net borrowing.

In an original suit filed under Article 131, the Kerala government has said the Constitution bestows fiscal autonomy upon states to regulate their finances under various articles, and the borrowing limits are regulated by a state legislation.

Under Article 131, the Supreme Court has the right to settle disputes between the Centre and states or between states.

In a note submitted before the top court, the Centre had

said uncontrolled borrowing by states would affect the credit rating of the whole country, and that the fiscal edifice of Kerala has been diagnosed with “several cracks”.