Kerala Counters Centre’s Claims on Borrowings and Financial Health in Supreme Court

In a recent development, the Kerala government has refuted claims made by the Union Government in the Supreme Court regarding the state’s borrowings and financial situation. The Kerala government argued that the Central Government constitutes approximately 60% of India’s total debt, making the state’s borrowing capacity less likely to destabilize the national economy. The state emphasized that the Union’s fiscal management has a more profound impact on both the economy and states’ finances, and the imposition of borrowing ceilings infringes upon the fiscal autonomy guaranteed by the Constitution.

The Kerala government further pointed out that the credit rating of states and their entities is adversely affected by the Union’s rating globally. It highlighted that when the Kerala Infrastructure Investment Board (KIIFB) raised funds through External Commercial Borrowings, the credit rating was influenced by the Union’s poor rating in the global market. The government accused the Union of overlooking its own dismal record in managing debt and criticized the note filed as an attempt to divert attention without addressing the core issues raised in the suit. The Supreme Court is currently examining the Kerala government’s petition against the alleged interference by the Centre in the state’s finances, emphasizing the importance of preserving fiscal autonomy as guaranteed by the Constitution.