The functioning of Kerala Infrastructure Investment Fund Board (KIIFB) would have to be scaled down if the Centre insists on including the loans taken by the Board in Kerala's annual borrowing ceiling, Kerala Finance minister K N Balagopal hinted.
The minister, however, expressed the hope that the Centre would climb down from its adamant stand.
But what if the Centre is unwilling to change its stand, which looks more likely?
"We will make some practical changes (in the KIIFB functioning) in such a way that it would be manageable for Kerala," he said.
According to Finance Department sources, this meant KIIFB projects would be prioritised. "There is a possibility that KIIFB would be shrunk," a senior official told Onmanorama.
As it stands, KIIFB has sanctioned 986 projects worth Rs 73,851 crore; originally, the plan was to limit KIIFB's investment at Rs 50,000 crore.
"Relatively less important works, those low in public utility, could be shelved," the official said.
Till now, KIIFB projects have not faced any difficulty in securing funds. "The functioning of KIIFB and its payments have not been disrupted. At the moment, KIIFB's fund position is intact," the minister said.
Besides the funds it sources from banks and other instruments like Masala bonds, KIIFB also gets 50 per cent of the motor vehicle tax and the entire petrol cess that Kerala collects annually.
Even then, Balagopal admitted to feeling the heat. "Though we have not been affected till now, we are also facing the kind of problems that such overbearing decisions of the Centre are imposing on us," he said.
The Centre's argument is that the off-budget borrowings of the kind availed of by KIIFB and KSSPL are adding to the debt burden of Kerala. This has to be curtailed.
This was why the Union Ministry of Finance has reduced Rs 14,312.80 crore – the amount KIIFB and KSSPL had borrowed till now – from Kerala's OMB. This, however, would be reduced not in one go, but in four equal instalments of Rs 3,578.20 crore from 2022-23 to 2026-27.
Nonetheless, given the importance the minister attaches to KIIFB, it is also clear that the LDF government has no plans to roll back KIIFB in any big way.
"KIIFB projects have given Kerala's development a big boost. It has been helpful for all major activities that necessitated heavy investment," the minister said.
Higher revenue mobilisation is the government strategy to keep KIIFB afloat.
Last fiscal, the state's own revenue had increased by Rs 17,000 crore. "This time, too, there would be a growth of at least Rs 10,000 crore," Balagopal said.
The minister also puts up a brave face. "I am of the firm belief that the Centre will change its stand on the issue (of including KIIFB loans in Kerala's borrowing limit). This is not just wishful optimism. I am sure they will have to dump their insistence. We are also relentlessly urging the Centre, with the backing of all the necessary documents, to shun their intransigence," he said.
In short, the minister said there were no plans to ground the KIIFB to a halt.
On Tuesday, Malayala Manorma reported KIIFB projects will not find a place in the 2023-24 Kerala Budget.
It was reported that the minister had written to MLAs saying that they need to propose any KIIFB projects for the next fsical's budget.
The minister said it was the same letter sent last time. "MLAs propose schemes for their constituencies under various schemes like MLA Asset Development Funds. But KIIFB, unlike these schemes, is not distributed on the basis of constituencies. It is used for the state as a whole," Balagopal said.