Supreme Court Blames Kerala for Financial Distress, Refuses Demand for Additional Borrowing

New Delhi: Supreme Court on Monday refused to grant interim relief to Kerala ascribing the state's financial distress to its botched up financial management. The apex court dismissed Kerala's plea for increased borrowing. The supreme court referred the state's challenge against state's borrowing limitations to a Constitution bench for additional investigation. 

A bench comprising of Surya Kant and KV Viswanathan underscored that Kerala could not meet the necessary parameters for an interim injunction on the borrowing cap. They emphasized that granting such relief might set up a precedent permitting states to didge fiscal policies despite financial mishandling. 

The court observed that the state failed to establish a prima facie case, balance of convenience and irreparable injury.

The apex court also stated that the state has already got major relief as Centre released Rs 13,608 crore after the plea was filed. 

The Supreme Court stated that certain pertinent questions regarding Federal Structure of Governance arise for consideration. The court stated that the such questions should be adjudicated by a five-judge Constitution bench and framed four questions to be decided by the bench. 

"Is fiscal decentralization an aspect of Indian federalism? If yes, do the impugned actions taken by the defendant purportedly to maintain the fiscal health of the country violate such principles of federalism? Are the impugned actions violative of Article 14 of the Constitution on the ground of 'manifest arbitrariness' or on the basis of differential treatment meted out to the plaintiff vis-a-vis other states?" the bench said.