Ceiling on net borrowing: SC refers Kerala govt's suit to five-judge Constitution bench

The Supreme Court referred the Kerala government's suit on net borrowing ceiling to a five-judge Constitution bench. The state accused the Centre of interfering with its financial autonomy by imposing borrowing limits. Article 293 of the Constitution, regarding state borrowing, has not been authoritatively interpreted by the apex court. Kerala's suit under Article 131 emphasizes state fiscal autonomy.

The Supreme Court on Monday referred to a five-judge Constitution bench the suit filed by the Kerala government raising the issue of ceiling on net borrowing.

A bench of Justices Surya Kant and K V Viswanathan passed the order on the state's suit, accusing the Centre of interfering in the exercise of its ''exclusive, autonomous and plenary powers'' to regulate the state's finances by imposing a cap on borrowing.

The bench referred to Article 293 of the Constitution, which deals with borrowing by states, and said this provision has not been so far subject to any authoritative interpretation by the apex court. In an original suit filed under Article 131 of the Constitution, the Kerala government has said the Constitution bestows fiscal autonomy upon states to regulate their finances under various articles, and the borrowing limits or the extent of such borrowings are regulated by state legislation.

Article 131 of the Constitution deals with the original jurisdiction of the apex court in any dispute between the Centre and states.