Financial crisis case: No surrender to center, proceedings to continue, center concerned about case

THIRUVANANTHAPURAM: The state government has decided to stand firm against the central government's proposal to withdraw the case in the Supreme Court, including the borrowing limit issue. Regardless of the final verdict, the state will vigorously pursue the case. This decision was made under the leadership of the Chief Minister.

However, experts warn that prolonged litigation and a strict stance from the center could lead to a severe financial crisis for the state. Salary, pension and project expenses are all at risk with the need to find at least Rs 25,000 crore by March to cover these expenses as regular credit limits are exhausted.

Meanwhile, the Center is concerned about the progress of Kerala's case. There is apprehension that a favorable verdict for the state could challenge the central government's control over off-budget borrowing, potentially leading to new practices. The central government is indicating that if Kerala withdraws the case, it would be seen as a compromise.

Rs 13,608 crore mentioned by the Center as a potential release is not related to the case filed by Kerala. This amount includes Rs 4,500 crore for power reforms, Rs 3,000 crore from treasury reserves and Rs 4,108 crore to be re-borrowed from repaid loans, which would have been received even if the case wasn't filed.

Finance Minister KN Balagopal criticized the central government's approach calling it blackmailing. He questioned the justification behind linking the release of funds to the withdrawal of the case describing it as a challenge to the Constitution and a form of blackmailing the people of Kerala. He emphasized that the state will not succumb to such pressure tactics even if it means facing delays in essential expenses like salary, pension and medical allowances.