The Supreme Court on February 13 hailed the readiness shown by the Centre and Kerala to meet for a “dialogue” on the State’s financial woes as an example of “cooperative federalism”.
“The government has agreed to keep a meeting. I hope they can engage in an open dialogue,” Attorney General R. Venkataramani informed a Bench of Justices Surya Kant and K.V. Viswanathan.
Senior advocate Kapil Sibal, appearing for Kerala, said a delegation from the State would fly to the capital to meet with the Central team on February 14 itself.
He, however, said Kerala Finance Minister K. N. Balagopal, unfortunately, would not be able to come with the State delegation due to the State Budget discussion on February 14.
“But the others will come. They can start the dialogue tomorrow itself… There is a sense of urgency here,” Mr. Sibal submitted.
Justice Kant said the dialogue could identify the issues and areas of discussion.
“As for urgency, you have to tell them instead of telling us,” Justice Kant told Mr. Sibal.
Next hearing on Monday
The court fixed the next hearing on Monday for directions.
Earlier in the day, the Bench had asked Mr. Venkataramani and Mr. Sibal to consider whether there was a possibility of dialogue and report back to the court at 2 p.m.
The court said an atmosphere of cordiality between the Union and the States “works for the country”.
Mr. Sibal had said the financial crunch may even impact the release of provident funds and essential payments. “The elections will come now,” he said in the morning.
Mr. Venkataramani had said the issue posed wide economic connotations across the country.
The developments came in an original suit filed by Kerala criticising the Centre of undue interference, amounting to encroachment in the legislative and executive power of the State, to manage its own affairs. In an unvarnished attack, Kerala has accused the Centre of adopting policies and making amendments in law devised to push States to a state of penury.
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 top 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”. Mr. Venkataramani’s note highlighted that debts run by States affect the credit rating of the whole country.
Centre’s ‘record of reining in own debt dismal’
Kerala had responded by contending that the Union government accounted for approximately 60% of the total debt or outstanding liabilities of India. It had said all the States put together account for the rest of the 40% of the total debt of the country. The State argued that the Union had a “dismal record of reining in its own debt”.
The State had urged the court to go through the International Monetary Fund (IMF), 2023 Data Mapper which revealed “the glaring fiscal under-performance of the Union government in managing its own finances over the last decade. It said the IMF country report 2023 had warned that “India’s debt could exceed 100% of the GDP in the medium term”.
“This places India in the group of countries where the debt exceeds its GDP. This makes India financially risky and vulnerable to macroeconomic destabilisation. India debt is the highest among its peer group in the emerging market economies of the world,” Kerala had highlighted.
.At the end of the hearing, Justice Viswanathan said the Centre had responded to the court’s proposal for talks “very positively” and shown the spirit of cooperative federalism.
Mr. Venkataramani said such efforts had been made in the past.
“The cooperation will continue from this end,” Mr. Sibal said.
Kerala Finance Minister KN Balagopal told The Hindu over phone from Thiruvananthapuram that a four-member delegation led by him will participate in the discussions with the Centre. Apart from the Finance Minister, Advocate General of the State Gopalakrishna Kurup, Principal Secretary to Chief Minister KM Abraham and State Principal Finance Secretary Rabindra Kumar Agarwal will meet the representatives from the Centre. “We welcome the Supreme Court’s decision. We will participate in the discussions and present our stand,” said Mr. Balagopal.
