Thiruvananthapuram: The State Government has decided not to include any projects financed by the Kerala Infrastructure Investment Fund Board (KIIFB) in the upcoming 2023-24 Budget.
Finance Minister K N Balagopal has directed legislators not to recommend any KIIFB project for consideration in the Budget. This is because the Central Government has considered the KIIFB loans as part of borrowings availed by the State Government and capped the loan ceiling of the state accordingly.
The Central Government has decided to include Rs 12,562 crore taken as a loan by institutions, including KIIFB in 2021-22, as the loan of the State Government. The Centre will deduct this Rs 12,562 crore from the amount that the State Government is eligible to avail of as a loan. From the upcoming fiscal year, the loan ceiling will be brought down by Rs 3,140 annually for four years.
Minister's guideline
The Finance Minister has asked the MLAs not to recommend new projects that can be directly implemented by KIIFB. Instead, they can recommend 20 projects outside the purview of KIIFB in the order of their priority. The minister also advised that new projects and projects that haven’t gotten administrative sanction so far could be included in this list.
During the first term of the Pinarayi Vijayan regime the Comptroller and Auditor General (CAG) had warned Kerala of the dangers of resorting to off-budget borrowings and wanted the borrowings of entities like KIIFB to be included in the annual budget documents and made part of revenue and fiscal deficits.
The State Government is also apparently chastened by the scrutiny of central agencies on the mobilisation of financial resources by during the previous term of the Pinarayi Vijayan Government (2016-21). Also, the Enforcement Directorate (ED) had charged KIIFB of violating the regulations under Foreign Exchange Management Act (FEMA) over the issue of 'masala bonds'. It even issued a summons to former Finance Minister Thomas Isaac for questioning over KIIFB's financial dealings.
Hurdles ahead for KIIFB
With the Finance Minister's latest directive KIIFB may find it even more difficult to raise funds for the developmental projects. The people’s representatives often complain that the KIIFB projects are dragging on for want of funds.
The KIIFB has so far given sanctions for 986 projects worth Rs 73,851 crore. Out of this, Rs 53,851 crore is for infrastructure development, and Rs 20,000 crore for land acquisition.
Most of the projects (449) have been sanctioned under the Public Works Department. A total of 142 projects come under the General Education Department and 93 projects under the Water Resources Department.
KIIFB raised Rs 31,508 cr so far
The KIIFB was formed in the first year of the first Pinarayi Government with the objective of implementing development projects worth Rs 50,000 crore in five years. KIIFB has raised Rs 31,508 crore so far. Out of this, Rs 19,220 crore was taken as loans from the open market and by way of issuing masala bonds on the London Stock Exchange. Apart from that, the State Government gave it half of the Motor Vehicle Tax and Rs 1 per liter price of petrol/diesel. The sum collected in this way amounted to Rs 14,919 crore. KIIFB got a revenue of Rs 762 crore from some of the projects it implemented. It spent Rs 22.192 crore from this revenue on various projects. KIIFB also used Rs 687 crore to repay loans.