The suit filed by the Government of Kerala in the Supreme Court against the Central government’s restrictions on borrowing limits did not yield a bonus as newspapers and some media in the State reported. The suit appeared for hearing on 6th March before the constitutional bench of Justice Surya Kant and Justice K V Viswanathan. In a way, one who went through the arguments would get two important messages from the observation of the Court. The argument was interesting and the judges seemed to have enjoyed it.
What went against the political interest of the petitioner and its representative, Kapil Sibal might be the true observation of the Court. Read the observation of Justice Surya Kant: “We acknowledge the fact that the entire world is recognising us as a booming and vibrant economy. Wherever we (judges) go out, we get the same feeling and it is based on correct facts and figures. There are strong pillars on which our economy is thriving.” The judge underlined the achievement of the nation.
In the election season, now the opposition cannot blame the Centre for the economic slowdown and other allegations. This is one reason why one must thank the State government for its suit that may not bring any bonus but advice from the Court to the Central government to discuss and resolve the issue of Kerala’s borrowing problem, keeping the suit in force at the same time. The Court did not pass any interim order since the Union government had offered the eligible Rs 13,608 crore to the State.
In the end, Justice Surya Kant advised the State to “hold a meeting, take this Rs 13608, make out a case for the remaining, except for the condition of withdrawal of the suit.” This is one reason one must thank the State for its suit that did not make the highest Court direct the Central government to exempt the State from any provision.
There was one more important point to note: While responding to the argument of Kapil Sibal, the Attorney General indicated: “There is a good enough literature on sub-national borrowing. There has to be some kind of regulation. You can’t say there should be freewheeling borrowing and I don’t look at the national scene.”
To this point, Justice Kant said: “Your officers have expertise in the domain. You find out ways and means.” In a way, it indicated that such a suit might force the Central government to find new ways to restrict sub-national borrowing to rein in the State prodigality, limit the vote-catching freebies, and maintain fiscal responsibility. The Central government must be thankful to the State for bringing the suit against it that might make the former explore new ways to discourage the State’s over-appetite for borrowings, which will ultimately burden the national economy.
Kapil Sibal is a known critic of the central government, and in his style, he argued in the Court. But Justice Surya Kant, while hearing the case, reminded him: “Judicial platforms should not be used to damage the image of States or Union.”
At times, Kapil Sibal even tried to compare the borrowing of the State with the Union government, forgetting that the Union government’s borrowing included the State borrowing and other non-state subjects like Railways, Defence, etc.
Justice Kant observed: “Fiscal management of states is an issue with which the Union must be concerned.” However, as Kapil Sibal saw the suit moving out of his hand to gain nothing big to claim that the Centre was losing the suit, he had to tone down and hastened to ask for the next hearing date.
It seemed, rather, that the Supreme Court was more seriously looking at the populist prodigality than Kerala’s concern about the borrowing cap. While refusing to pass interim orders on the suit filed by the State, the Court instructed the State’s political leadership to refrain from issuing statements on the issue.
“We cannot pay out of public funds. We cannot pay other allowances like pension, dearness allowance, or pay revision. The impact of all this is only a few months away. There is a critical overdraft position. If we lose another two Tuesdays, we will not get any money from the Reserve Bank of India. We cannot do any market borrowing at this time. This is a serious issue,” Kapil Sibal virtually cried before the bench. The pitiable situation however did not draw any mercy of the judges and a direction to accept what the Union government approved as on the date.
(Sriparvathi Marar is a Third Year Law student based in Mumbai)
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