"States' Debt Affects Country's Rating": Centre On Kerala Borrowing Curbs

In a note submitted before the top court, Attorney General R Venkataramani submitted that public finance management is a national issue.

Uncontrolled borrowing by states would affect the credit rating of the whole country and the fiscal edifice of Kerala has been diagnosed with "several cracks", the Centre has told the Supreme Court on the issue of limits imposed on the state's borrowing capacity.

In a note submitted before the top court, Attorney General R Venkataramani submitted that public finance management is a national issue.

Venkataramani said if the State indulges in reckless borrowing to finance unproductive expenditure or poorly targeted subsidies, it will crowd out private borrowing from the market.