Responding to the petition of Kerala State in the Supreme Court, the Central Government has said that it is among the most economically sick states.
The Kerala government had alleged that by interfering in the state’s financial system, the Center was pushing it towards serious losses.
It was said in the petition that any state has the right to manage its economic system through its budget and borrowing. At the same time, the central government has made such rules which can lead the state towards poverty.
According to the report of Times of India, the Center told the Supreme Court that Kerala is facing economic problems due to its mismanagement and is among the most economically sick states.
The Center said that there are many shortcomings in the financial management of Kerala.
Kerala does not want to increase its borrowing limit because it has to do any development work but it wants the loan to meet its routine responsibilities.
The Center said that the state’s liability as compared to its GSDP is continuously increasing. In 2018-19 it was 31 percent, which increased to 39 percent in just two years.
Whereas the average liability of other states is only around 30 percent. The Center said, due to Kerala’s huge liability, it also has to bear the burden of interest.
Because of this, the state of Kerala is falling into the debt trap and the state’s deficit is increasing.
The Center said that the expenditure on infrastructure has also increased as compared to the revenue. It was 74 percent in 2018-19, which has now increased to 82 percent.
In such a situation, the state is getting trapped in long-term debt by taking loans to build infrastructure. This economic crisis is not going to end soon.
The state’s revenue deficit is the highest. Instead of investing money in any productive scheme, the state wants to take loan for routine work which includes payment of salary, pension and interest.