NEW DELHI: Centre and Kerala govt have to fight it out in the Supreme Court on validity of Union govt's decision to cap borrowing capacity of the state as both failed to resolve the issue. Centre offered Rs 5,000 crore but the state insisted on a Rs 10,000 crore bailout package.
Responding to an appeal made by SC asking the Centre to give one-time concession to the state which is in the midst of a financial crisis, additional solicitor general N Venkataraman told a bench of Justices Surya Kant and K V Viswanathan that the state could be granted only Rs 5,000 crore and the amount would be adjusted in the next financial year.
Senior advocate Kapil Sibal, however, told the bench that the state needed at least Rs 10,000 crore and nothing short of that amount would solve the financial crisis of the state. As the Centre told the bench it was not possible to further increase the amount, Sibal said that he would argue the case on merit and convince the court that the state was entitled to borrow money.
SC was hearing a plea filed by the state against the Centre's decision to impose limits on the state's borrowing capacity. The court had earlier asked both govts to sit together and sort out the issue through dialogue.
Centre and the state are at loggerheads with Kerala govt approaching SC contending that Centre's decision was against fiscal federalism.