Ceiling on net borrowing: Kerala welcomes SC move referring plea to Constitution bench

Kollam: Kerala Finance Minister K N Balagopal on Monday welcomed the decision of the Supreme Court to refer the suit filed by the state government raising the issue of a ceiling on net borrowing and other financial matters to a five-judge Constitution bench.

Balagopal said the interim order of the Supreme Court was an important one for the state as well as the nation.

"The most important thing is that it was the first case in the country to deal with fiscal federalism. The BJP government and the opposition UDF in Kerala were claiming that there was no basis for our arguments. But now the apex court has referred the matter to a Constitutional bench," Balagopal told the media here.

The Supreme Court today passed the order on the state's suit, accusing the Centre of interfering in the exercise of its "exclusive, autonomous and plenary powers" to regulate the state's finances by imposing a cap on borrowing.

The court referred to Article 293 of the Constitution, which deals with borrowing by states, and said this provision has not been so far subject to any authoritative interpretation by the apex court.

In the suit, the Kerala government has said the Constitution bestows fiscal autonomy upon states to regulate their finances under various articles, and the borrowing limits or the extent of such borrowings are regulated by state legislation.