Kerala: Supreme Court Urges Centre To Consider 'One-Time' Package For The State Amid Fiscal Crisis

In a recent development, the Supreme Court has urged the Centre to consider extending a special financial package to Kerala to alleviate its severe fiscal crisis, emphasising the need for flexibility in norms to provide immediate relief.

During the hearing of Kerala's plea against borrowing restrictions, the bench suggested exploring the possibility of a one-time package before 31 March, acknowledging the state's dire situation.

Kapil Sibal, representing Kerala, highlighted the state's urgent need for additional funds, while the Centre maintained its stance on rejecting bailout packages as a matter of principle.

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The bench, however, pressed for a special case consideration, proposing the offsetting of funds from the next fiscal year.

Justice Kant said the Centre could afford to be “slightly liberal and give a one-time package as a special case” to Kerala but impose more rigid conditions in future budgets.

“Before March 31 give them [Kerala] the special package. But subject to harsher conditions than other States. Just some extra concession for the next 10 days, you can adjust it in the first quarter of next year,” the Bench addressed the Centre.

The matter is set to be revisited, with the Centre expected to consult relevant authorities and respond to the court's suggestion.

Kerala had moved the Supreme Court earlier in an original suit accusing the Union government of violating the federal structure of governance and causing “severe damage to the economy of a small State with meagre resources” by limiting its borrowing powers.

The Centre had hit back by accusing Kerala of being “one of the most financially unhealthy States”. 

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