Give Kerala onetime package to tide over financial crisis, SC tells Centre

Justice Surya Kant says Centre can be slightly liberal now and impose rigid conditions in future budgets; Attorney General and Additional Solicitor General say they will discuss the issue with the government and report back to the court today

The Supreme Court on Tuesday urged the Centre to give Kerala a onetime package to tide over its current financial crisis as a “special case” before March 31.

A Bench headed by Justice Surya Kant said the Centre could make up for it in the next financial year by introducing stricter conditions for financial aid to the State.

An initially reluctant Centre, represented by Attorney General R. Venkataramani and Additional Solicitor General N. Venkataraman, who said a “bailout package is impossible”, relented to discuss the issue with the government and report back to the court on March 13.

The exchange in court happened during an oral mentioning made by senior advocate Kapil Sibal, appearing for Kerala. Mr. Venkataraman said the Centre had refused to be liberal with other States.

Justice Kant, however, said the Centre could afford to be “slightly liberal and give a onetime package as a special case” to Kerala but impose more rigid conditions in future budgets.

“Before March 31 give them [Kerala] the special package. But subject to harsher conditions than other States. Just some extra concession for the next 10 days, you can adjust it in the first quarter of next year,” the Bench addressed the Centre.

Mr. Venkataramani said the court should ask Kerala why they could not make ends meet. However, he said the Centre did not want to be at loggerheads with the State.

Kerala’s complaint

Kerala had moved the Supreme Court in an original suit accusing the Union government of violating the federal structure of governance and causing “severe damage to the economy of a small State with meagre resources” by limiting its borrowing powers.

The State said the arbitrary limitations set by the Centre had brought it to the brink of a financial emergency.

The Centre had hit back by accusing Kerala of being “one of the most financially unhealthy States”. A note submitted by the Attorney General in the court had said the “fiscal edifice of Kerala has been diagnosed with several cracks”.

The Centre had said the poor financial indicators of Kerala point to a “lack of proper management of its public finances”. The note had highlighted that debts run by States affected the credit rating of the whole country.

Before March 31 give them the special package. But subject to harsher conditions than other States. Just some extra concession for the next 10 days

SUPREME COURT BENCH