Supreme Court suggests Centre to go ‘slightly liberal’ & provide one-time bailout package as CPM govt demands Rs 19,000 crore.
The Supreme Court on Monday, 11th March, suggested that the Central government provide a one-time bailout package to the state of Kerala, which is reeling under a financial crisis.
Deferring the matter to tomorrow, 13th March, at 10:30 am, the bench of Justices Surya Kant and KV Viswanathan said that the package can be given subject to strict conditions.
“You can be slightly liberal and give a one-time package as a special case. And more rigid conditions in future budgets … Before March 31 give them the special package. But subject to harsher conditions than other states. For the existing States you will be liberal next time (perhaps),” Justice Kant remarked to the counsel for the Central government.
The matter will be taken up on 13th March with the Centre and State government officials likely to hold a meeting before then.
Kapil Sibal represented the State of Kerala while Attorney General R Venkataramani and Additional Solicitor General N Venkataraman appeared for the Central government.
On Tuesday, the Kerala government sought an immediate release of Rs 19,000 crore that it claims the Centre owes it.
“The moment the Power Ministry says they have complied, it will be transferred. Bailout package is not possible under this scheme,” the ASG responded saying that the Centre cannot give any special treatment to Kerala.
Furthermore, it submitted that the Kerala government’s case is not a special one. “Theirs is not a special case … We have declined to other States. They do not even budget expenditures. 15 times more bailout sought than expenditure package,” the ASG said.
He said that the Centre’s hands are tied in the matter.
The AG said, “”Let them tell the court why they cannot pay … But to find a way out despite constraints, we are not at loggerheads.”
The Kerala government in its plea reportedly claimed that the Central government was interfering with the former’s power to borrow and regulate its finances.
The Pinarayi Vijayan government filed a suit in December 2023 alleging that the Centre had limited the state’s borrowings leading to an accumulation of unpaid dues and could result in a grave financial crisis.
As per reports, the state government failed to pay salaries to several of its employees for the month of February.
In mid-February, the Kerala government and Centre held talks to resolve issues concerning finance and budgeting.
Kerala’s financial crisis
The Kerala government has landed in an acute financial crisis in the recent years. Previously, during the course of the hearing, the Centre submitted to the Court that the Reserve Bank of India (RBI) has categorised Kerala as one of the five highly stressed states requiring urgent corrective measures.
As per reports, the CPM-led Kerala government’s expenditure has seen a significant rise. 78% of its revenue income has reportedly been spent in the fiscal year 2018-19. The fiscal deficit has escalated from 2.4% in 2017-18 to 3.1% in 2021-22.
The Centre has accused Kerala of negatively impacting India’s credit rating due to its state debt and warned that defaulting on debt servicing could create a reputation issue and a domino effect.
Unable to explain the situation, the Pinarayi Vijayan government has been on the offensive accusing the Centre of capping their borrowings.
What happened to remaining 187?
In the affidavit, the bank, the authorised financial institution under the scheme, said, as per rules, the remaining 187 were redeemed and the money has been deposited in the Prime Minister’s national relief fund.
Password-protected document
In the compliance affidavit, the SBI informed that the details of the electoral bonds were submitted to the poll body in a pen drive.
A total of 22,217 electoral bonds were purchased and 22,030 redeemed by political parties between April 1, 2019, and February 15, 2024, the State Bank of India (SBI) told the Supreme Court on Wednesday.
A compliance affidavit was filed by Chairman of SBI, Dinesh Kumar Khara, to the SC, a day after the bank sent all electoral bonds data to the Election Commission of India (ECI) as per the order of the court.
When can you view electoral bonds data?
On March 11, a five-judge Constitution bench of Supreme Court headed by Chief Justice of India (CJI) DY Chandrachud dismissed the SBI’s plea seeking an extension of time and ordered it to disclose the details of electoral bonds to the EC by close of business hours on March 12.
The court also directed the ECI to publish the details shared by SBI on its official website by 5 pm on March 15 after which people can view the data.
On February 15, the Supreme Court, in a landmark verdict, scrapped the Centre’s electoral bonds scheme calling it “unconstitutional” and ordered disclosure by the ECI of donors, the amount donated by them and the recipients.
What was electoral bonds scheme?
On January 2, 2018, the Central government announced the electoral bonds scheme which was pitched as an alternative to cash donations made to political parties as part of efforts to bring in transparency in political funding.
The first sale of electoral bonds took place in March 2018.
An eligible political party could encash electoral bonds only through a bank account with the authorised bank.