Kerala-Centre Fund Dispute: Negotiations Fail, Supreme Court To Hear Matter Next Week

The Supreme Court has decided to adjudicate the matter pertaining to a dispute on borrowing limits between the state of Kerala and the centre, after negotiations between the two failed.

The case pertains to a plea filed by the state of Kerala against the central government, accusing it of imposing a net borrowing ceiling, which limits the state's borrowings from all sources, including open-market borrowings.

According to the plea, the reduction in borrowing limits will have an extremely deleterious impact and cause long-term economic damage to the state, which will be irremediable in the short, or even medium term.

The state has suffered a cumulative expenditure loss or resource deficiency of nearly Rs 1.07 lakh crore during fiscal 2016–23, according to the plea.

It is estimated that over a period of the next five years, the net negative impact on Kerala's economy could be as high as Rs 2–3 lakh crore, with FY17 as the base year. This represents 20–30% of Kerala's current gross domestic product over a six-year period, the plea states.