Centre can't set borrowing limits for states: Kerala govt to SC

THE KERALA GOVERNMENT has accused the Central government of stifling the state's revenue streams by "arbitrarily imposing" a net borrowing ceiling, which it said is violative of the relevant provisions of the Constitution.

- PRIYANSH VERMA

In response to a note filed by the Centre in the SC, the Kerala government has said that under Article 293 of the Constitution, the states have the authority to set limits on their own borrowings. In a move that has few precedents, the State of Kerala had filed a suit in the apex court on December 13, seeking remedy against the Union government's alleged trespasses on fiscal federalism, and "calculated" attempts to "reduce the state to extreme penury." The SC will hear the case on March 6 and 7. "Since these legislations enacted by a state are in place, for this reason too, the Union government cannot through mere executive orders under Articles 293(3) and 293(4) subvert the operation of a valid state legislation under the Constitution and coercively impose any limits on its borrowings overriding the Legislature of the State," the state government.