The affidavit was filed in an original suit filed by the State earlier raising grievance over the Central government allegedly interfering with the State’s power to borrow and regulate its finances.
The plea filed by the Kerala government in December last year alleged that the Centre’s actions can lead to a grave financial crisis as the State has not been able to fulfil the commitments made in its annual budgets.
The Supreme Court had in January issued notice to the Central government in the case.
The Central government then filed a counter affidavit in which it said that Kerala’s financial health is in dire straits due to substantial off-budget borrowings and a compromised fiscal edifice.
It underscored that prudent public finance management is a national priority, with implications for the nation’s competitiveness and sovereign credit ratings.
If a State indulges in reckless borrowing to finance unproductive expenditure or poorly targeted subsidies, it will crowd out private borrowing from the market, it contended.
Source: Barandbench
