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The Supreme Court witnessed a significant development on Wednesday as the Centre expressed its readiness to permit the Kerala government to borrow Rs 5,000 crore, albeit subject to certain conditions, to address the state's financial challenges.

 

However, Kerala insisted that this amount falls short of its minimum requirement of Rs 10,000 crore. The Centre's stance came in response to the court's directive to consider extending a one-time bailout package to Kerala by March 31 to alleviate its financial strain.

 

During the proceedings, Additional Solicitor General N Venkataraman, representing the Centre, outlined the conditions attached to the proposed borrowing.

 

He explained that the Rs 5,000 crore would be deducted from Kerala's net borrowing ceiling for the first nine months of the financial year 2024-25, and no ad-hoc borrowing would be permitted for the entire year.

 

Additionally, Kerala would need to submit its proposed resource-raising plan outlined in its budget for the fiscal year to gain borrowing consent for the final quarter of 2024-25.

 

However, senior advocate Kapil Sibal, appearing for Kerala, expressed reservations about the Centre's offer, arguing that Rs 5,000 crore would not suffice. He emphasized that the state urgently requires Rs 10,000 crore without any adjustments.

 

Despite the bench's suggestion to accept the offered amount while continuing negotiations for the desired sum, Sibal urged the court to list the matter for further discussion.

 

The ASG defended the Centre's position, stating that it follows a uniform, non-discriminatory approach in granting borrowing consent.

 

He highlighted concerns regarding Kerala's past expenditure trends, indicating that the proposed borrowing limit might pose significant challenges for the state to manage its finances adequately.

 

In response to the arguments presented, the bench appreciated the efforts made by both parties and agreed to list the matter for further hearing on March 21.

 

However, it advised Kerala to accept the offered Rs 5,000 crore while continuing negotiations for a higher amount. The court underscored the urgency of the situation, emphasizing the potential hardships that Kerala might face if its financial needs are not met adequately.