No breakthrough in talks with Centre over fiscal federalism issues: KN Balagopal

New Delhi/Thiruvananthapuram: Finance Minister K N Balagopal on Thursday said the state's discussion with the Centre over the issues of fiscal federalism failed to find a "breakthrough". 

The meeting was convened in the national capital following the Supreme Court's suggestion during a hearing of the petition filed by the Kerala government accusing the Centre of interfering in the exercise of its "exclusive, autonomous and plenary powers" to regulate the state's finances by imposing a ceiling on net borrowing.

A four-member group, headed by Balagopal, held a meeting with central government officials, including the Union Finance Secretary T V Somanathan. "There was no positive outcome at today's meeting... there was no breakthrough. We submitted the most feasible options (to the Centre)," Balagopal said at a press briefing here.

At the briefing, Balagopal said the case is about fiscal federalism and the main issues were not resolved at today's meeting. "The discussions were not successful." From the meeting, Balagopal said, it appears that the ongoing case is seen as a hindrance in discussing the important issues raised by the state.
On Friday, the secretaries from the state and the Centre will discuss certain accounting issues related to the state's demands, he added.

Apart from Balagopal, other members of the group are Chief Principal Secretary to the Chief Minister KM Abraham, Finance Principal Secretary Rabindra Kumar Aggarwal and Advocate General K Gopalakrishna Kurup.

From the Centre's side, apart from Somanathan, Additional Solicitor General N Venkatraman, Additional Secretary Sajjan Singh Yadav, and Joint Secretary Amit Singh Negi were present in the meeting.

On February 13, the Centre told the apex court that it is open to discussions with Kerala to resolve the dispute.

In the original suit filed under Article 131, the Kerala government said the Constitution bestows fiscal autonomy upon states to regulate their finances under various articles, and the borrowing limits are regulated by state legislation.

Under Article 131, the Supreme Court has the right to settle disputes between the Centre and states or between states. The ruling Left Democratic Front (LDF) in Kerala has been raising concerns over the BJP-led central government's approach towards states.

On February 8, leaders and lawmakers from the LDF, led by Chief Minister Pinarayi Vijayan, staged a protest against the Union government in the national capital. Vijayan has accused the central government of not giving states their due share of taxes, and using governors in opposition-ruled states to disrupt the functioning of the governments.
(With PTI inputs)