Kerala one of most financially unhealthy states: Centre in Supreme Court

New Delhi/Thiruvananthapuram: A day ahead of the protest to be led by Kerala Chief Minister Pinarayi Vijayan, his cabinet, legislators and top leaders from the Left ruling front, the Centre on Wednesday in a detailed written note filed before the Supreme Court said that there were multiple studies documenting poor public finance management by Kerala.

"Kerala has been one of the most financially unhealthy States and its fiscal edifice has been diagnosed with several cracks ... Squeezed for funds for capital expenditure and to circumvent borrowing limits ... Kerala has resorted to substantial off-budget borrowings through the Kerala Infrastructure Investment Fund Board (KIIFB)," stated Attorney General (AG) for India R. Venkataramani.

The written note came in response to an original suit filed by Kerala raising grievance over the central government allegedly interfering with the former’s power to borrow and regulate its own finances.

The state had also in its plea alleged that the Centre's actions can lead to a grave financial crisis, as the State has not been able to fulfill the commitments made in its annual budgets.

Incidentally including Vijayan, all those who will walk from the Kerala House on Thursday morning to Jantar Mantar and stage a sit in dharna against the high handedness of the Centre in not giving Kerala its due share, have all reached the national capital.

A bench of Justices Surya Kant and KV Viswanathan is set to take up the matter on February 13 next and decide on Kerala's interim relief application.

The AG in his note further highlighted several financial indicators of Kerala in support of his contentions including high levels of debt-GDP ratio, interest payments to revenue receipts ratio, gross fiscal and revenue deficits, share of provident funds in its outstanding liabilities and pay/pension payments.

"Despite the devolution of substantial resources from Central taxes and duties, highest share of post devolution Revenue Deficit Grant, financial support extended by the Union Government over and above the recommendations of the Finance Commission and substantial transfer of resources to the State Government under the Centrally Sponsored Schemes, any financial stress that the Government of Kerala is facing is purely due to its own financial mismanagement," read the AG’s note.

Kerala is the second state after Punjab to move the apex court in relation to a financial dispute with the Union government.