Thomas Isaac justifies off-Budget borrowings for infra development, welfare

Thomas Isaac speaks at National Urban Conclave - Bodhi 2022 in Kochi on Monday. Photo: Special arrangement

Kochi: Former Kerala Finance Minister Thomas Isaac on Monday defended the state depending largely on extra-budgetary borrowings through institutions like KIIFBI, saying the loans are taken for meeting capital expenditure to enhance critical infrastructure and welfare schemes benefitting the masses.

He was addressing the two-day National Urban Conclave – Bodhi 2022, being held here.

Interestingly, Isaac reiterated his stance on off-Budget borrowings hours before the Kerala High Court said there was "no justification" for the repeated summons to the senior CPM leader by the Enforcement Directorate (ED) in connection with the probe into alleged violations by KIIFB.

“Many quarters raised the question as to why Kerala borrow outside the budget…The future liability will exceed the income flow. (Still) I’m more for extra-budgetary borrowings if they are for capital expenditure than current expenditure…Investing in housing, healthcare, education etc are all part of creating assets for the well-being of the people,” he said.

Isaac cited the Life Mission Project and the school digitalization drive of the Keala government to make his case.

“Two million houses were constructed in the last 25 years…. The Life Mission has reached a stage where another five lakh houses would mean everybody in the state has a house. Once you clear the existing backlogs, it will resolve the entire housing problem in the state,” the former finance minister said.

He cited the development of Kochi city where the KIIFBI invested Rs 10, 000 crore for infrastructure facilities like flyovers. “Similarly, the classrooms in both public and private schools have been digitalized. The government is in the process of providing every school student with a laptop,” he said.

Noting that the local self-governments play a crucial role, the former minister highlighted the need to continue participatory budgeting. The state initiated the decentralization process and the people’s planning campaign back in 1996 by making available the funds to the local bodies. However, planning is important for success of such projects. Now every local government body indulges in planning, he said.

“While the state plans are a repetition of old schemes, that of the local bodies reflect new projects. A substantial devolution is taking place at the local government level for infrastructure creation,” he pointed out.

Isaac touched on various funding options before the government including the PPP (Public Private Partnership), BOT (Build Operate and Transfer) methods, while heaping praise on CIAL (Cochin International Airport Ltd) model.

“It’s one successful model that can be replicated in urban development projects in the future. The government has control in the sense the top posts including Managing Director are filled by it. Yet the director Board operates autonomously. The operations have turned profitable. The CIAL itself is now engaged in other infrastructure development projects such as the National Water Way,” the former minister said.

The government has initiated two mega projects – the Thiruvananthapuram Outer Ring Road and the development of over 10,000 acres of land, drawing an investment of Rs 25,000 crore, he said.

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