The Centre expressed its willingness to engage in discussions with the Kerala government regarding financial matters, the Supreme Court was informed on Tuesday.
Attorney General R Venkatramani conveyed to a bench comprising justices Surya Kant and KV Vishwanathan that the Union Government is receptive to hold a meeting with the Kerala Government, acknowledging the court's suggestions in this regard.
Senior Advocate Kapil Sibal, representing the Kerala Government, informed the court that a delegation from Kerala could arrive as early as tomorrow, proposing that the meeting take place on Wednesday. However, he noted that the state's Finance Minister might be unavailable due to budget-related commitments. The Attorney General assured the court of facilitating the meeting.
The Court urged both the Centre and the State governments to delineate the issues for discussion bilaterally and scheduled the matter for further hearing next week.
Earlier, the Kerala Government, in its affidavit, underscored the substantial contribution of the Central Government to the national debt, refuting allegations of fiscal mismanagement. It emphasised that the state's debt burden was comparatively minimal, accounting for a mere 1.70-1.75 percent of the total debt of the Centre and the states combined from 2019 to 2023.
Responding to the notes filed by the Attorney General, Kerala Government made submission and said, "The Central Government accounts for approximately 60 per cent of the total debt or outstanding liabilities of India. All the states put together account for the rest (approximately) 40 per cent of the total debt of the country. In fact, the Plaintiff State accounts for a miniscule 1.70-1.75 per cent of the total debt of the Centre and the States put together for the period 2019-2023."
The Attorney General, in a written submission, highlighted Kerala's precarious financial condition, citing criticisms from successive Finance Commissions and the Comptroller and Auditor General (CAG). He underscored the state's vulnerability, portraying its fiscal framework as riddled with structural weaknesses.
Responding to Kerala's lawsuit, the Centre reiterated Kerala's financial fragility, attributing it to systemic flaws within the state's fiscal apparatus.
Furthermore, the Attorney General highlighted in his note the adverse impact of state debt on the country's credit rating, echoing concerns raised in Kerala's petition against alleged encroachments on its fiscal autonomy.
In a suit filed by Kerala government, it stated that state government deals with the executive power conferred on the Plaintiff State under Article 293 of the Constitution of India to borrow on the security or guarantee of the Consolidated Fund of the State in alignment with the fiscal autonomy of the Plaintiff State as guaranteed and enshrined in the Constitution.
Kerala's grievance stems from perceived infringements by the Centre, particularly through directives issued by the Ministry of Finance and amendments to the Fiscal Responsibility and Budget Management Act of 2003, which imposed borrowing restrictions on the state.