Communist Kerala suffered a deep blow at the hands of the Supreme Court! The recent SC’s ruling on Kerala’s raising funds and borrowing limits may have put a full stop to the state’s long standing freebie politics. The LDF-led state government’s battle to arm-twist 26,000 crores out of the BJP-led central government comes to a dead end. The SC has refused the state’s right to demand more from the center.
As the fight over fiscal policies goes to a constitutional bench of five, it becomes increasingly clear that the era of unchecked spending and populist measures may be coming to an end. Let’s discuss Kerala’s political landscape and ‘Revadi ka Rivaz’!
SC’s Verdict and Its Implications on Kerala
The Kerala government stated in court that it needed 26,000 crores to honor its fiscal needs. The initial 5,000 crore advance offered by the center did not meet the initial demand of 15,000 crores by the state. The center, guided by preset policies and a need to end the court brawl, provided an interim relief of more than 13,000 crores to the state. However, the state government presented in court that it needs 26,000 crores currently and the center is not allowing it to ‘raise funds’ for the deficit amount. Therefore, it challenged the borrowing limit set by the Union for states in the top court. However, the Supreme Court upheld the ceiling limit and rejected the state’s plea for the same. Consequently, it refused Kerala’s attempt to demand more money.
Unfortunately for the LDF, the SC’s verdict spells a financial dry spell for the state! It seems that the tug-of-war in politics between the state and central governments will leave the common man deprived!
Moreover, the Supreme Court’s decision highlights the By-The-Book Approach Of The BJP-led central government.
However, the battle signifies an important shift in the state-center fiscal dynamic. Additionally, the decision to refer the larger question of ‘raising funds’ to a constitutional 5-judge bench should raise alarms. While the SC asks for a thorough examination of the issue of ceiling limit, it also examines if state can decide for themselves on how much loans they can ask for without the interference from the Union government!Â
Should Kerala’s freebie politics get more relief from the Union government? Should states be allowed to bypass the Union government to decide their loan limits? How much is too much in terms of fiscal autonomy for state governments? These questions will only be answered by the constitution bench’s decision!
The Downfall Of Freebie Politics In Kerala?
Kerala’s communist regime has deep roots in ‘revadi’ politics and unhealthy finances. A culture of freebies and extravagant, unaccounted spending has led to a state of financial crisis. The state runs in deficit every year, i.e. its expenses almost always outrun its contribution to the GDP.
Consequently, the only thing that keeps Kerala’s state institutions afloat is the advance it begs from the Union government every year.
However, this advance needs to be paid back in the next financial year.
Thereby, keeping Kerala in a cycle of increasing debts every fiscal cycle!
The BJP-led central government imposed a limit on Kerala’s borrowing this year. This ceiling limit of 3.5% of the GSDP of FY24 and FY25 exposed the flaws in Kerala’s unsustainable fiscal policies. Despite an advance of more than 13,000 crores the state is unable to meet its obligations! Thus, it is obvious for anyone with eyes to see how Kerala’s overindulgence in populist measures contributed to its current economic predicament. Additionally, no steps were taken by the state government to rectify its financial mismanagement. Instead, every election season new ‘revadi’ and ‘freebies’ were offered to keep the voters happy.
Thus, today Kerala grapples with a mounting debt that it is unable to pay back. Moreover, its fiscal instability has resulted in irregular salaries, pending pensions, and lacking developmental schemes. It seems this Kerala Story is a cautionary tale of freebie politics gone awry!
A Win Or A Loss?
The Supreme Court’s ruling is a mixed-bag win for Bharat! On one hand, the SC’s ruling subtly asks Kerala to abandon its reckless pursuit of more funds to fuel its populist agendas and voter appeasement through ‘freebies.’ It also cautions them to prioritize fiscal responsibility. However, on the other hand the ruling refers the questions of ‘raising funds’ and ‘loan limits’ to a bench of five. This referral of the SC may be an act of opening Pandora’s Box for the Indian economy! If state’s bypass the center’s assent to decide their own loans, it may lead to a complete breakdown of the economy! After all, each state’s economy contributes to the nation’s growth. Will unhealthy economies be allowed to poach on the healthy ones within the nation?Â
The LDF has failed the people of Kerala by prioritizing political games ahead of genuine development and responsibilities. The SC’s ruling also acknowledges this stark truth. However, will Kerala rise to the challenge presented by SC’s verdict? Is it the end of Communism-driven freebie culture in politics? Let’s hope so. There is enough honest tax-payers’ money being poured into welfare schemes without the addition of election-driven ‘Revadi ka Rivaz’!