Jahanvi Agarwal
The Supreme Court recommended that the Central government consider providing Kerala with a one-time financial assistance package to help alleviate the state’s current economic challenges. Justices Surya Kant and KV Viswanathan suggested that while this assistance could be granted, it should come with stringent conditions.
Justice Kant remarked to the Central government’s counsel, “You can be slightly liberal and give a one-time package as a special case. And more rigid conditions in future budgets … Before March 31 give them the special package. But subject to harsher conditions than other States. For the existing States you will be liberal next time (perhaps).” The Court acknowledged its lack of expertise in financial matters but encouraged both governments to find a compromise.
The matter is set to be revisited the following day, with officials from both the Central and State governments expected to meet beforehand. Senior Advocate Kapil Sibal represented the State of Kerala, while Attorney General R Venkataramani and Additional Solicitor General N Venkataraman represented the Central government.
The plea, filed by the Kerala government, alleged that the Central government’s interference in the state’s borrowing and financial regulation had led to unpaid dues and a potential financial crisis. The State had failed to pay salaries to many employees in February. Following the Supreme Court’s encouragement, both governments agreed to engage in discussions to resolve financial issues.
During the hearing, Sibal urged for the immediate release of Rs.19,000 crore owed by the Centre to Kerala. However, the Additional Solicitor General stated, “The moment the Power Ministry says they have complied, it will be transferred. Bailout package is not possible under this scheme.” The Centre emphasized that Kerala’s situation was not unique and that they faced constraints in providing special treatment.
The Attorney General added, “Theirs is not a special case … We have declined to other States. They do not even budget expenditures. 15 times more bailout sought than expenditure package.” Despite constraints, the AG expressed willingness to find a resolution. The bench suggested that an interim solution be worked out, proposing that Kerala receive special concession from the Central government for the time being.
Case Name: State of Kerala v. Union of India
Diary Number: 51385/2023
Bench: Justices Surya Kant and KV Viswanathan