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R Venkataramani, the Attorney General (AG) of India, representing the Central government, informed the Supreme Court on Tuesday that the government is prepared to engage in discussions regarding the contentious issue of the cap on net borrowing with the Kerala government.

During the court proceedings, senior advocate Kapil Sibal, appearing on behalf of the Kerala government, conveyed that the state is also willing to send a delegation to Delhi on Wednesday, February 14, for a dialogue with representatives of the central government.

The matter was being heard by a two-judge bench of the Supreme Court, chaired by Justice Surya Kant and also comprising Justice K V Viswanathan.

The hearing revolved around Kerala's plea for interim relief, alleging illegal interference by the Centre in the state's finances and budgeting processes.

The judges suggested that both parties engage in dialogue to resolve the deadlock, with Justice Surya Kant emphasizing the importance of genuine initiative and negotiation in finding a solution.

"Whether the state or the Centre, there are seasoned administrators who have in their public life seen the world in different capacities. We are confident that you will be able to find a solution," remarked Justice Kant optimistically, scheduling the next hearing for February 19, Monday.

AG Venkataramani had previously contended before the Supreme Court that Kerala's financial matters fell within the purview of economic management policy, accusing the state government of attempting to deflect attention from its own financial shortcomings.

In response to the plea for interim relief, the Apex Court had directed the Centre to submit a detailed reply within a week, highlighting the gravity of the matter.

The petition filed by the Kerala government alleges unwarranted interference by the Centre in the state's finances, particularly citing the imposition of a Net Borrowing Ceiling.  It asserts that such interference has led to substantial arrears owed by the state, impacting welfare schemes, beneficiaries, government employees, pensioners, and state-owned enterprises.