To borrow Rs10,000 crore in current fiscal
CL Jose
THIRUVANANTHAPURAM: KIIFB has really been too lavish in announcing projects, but it may yet be interesting to watch where from it’s going to bring the huge fund required to complete these projects.
Even as the off-balance sheet borrowings of Kerala have been giving enough sleepless nights to the state in the form of curtailed net borrowing ceiling (NBC), Kerala Infrastructure Investment fund Board (KIIFB), the infrastructure project arm of the state is girding its loins to borrow a fresh Rs10,131.69 crore.
An official KIIFB document has stated “the 47th meeting of the board of Kerala Infrastructure Investment fund Board (KIIFB) held on March 4, 2024 has accorded approval for Rs10,131.69 crore borrowing plan.”
On the one hand, there are tens of thousands of crores worth projects that have been announced but yet to be funded, and on the other, Rs2,150 crore raised by KIIFB in March 2019 through the ‘headline-grabbing’ masala bond’ issue has come up for redemption on completion of the bond’s five-year tenure.
There were reports quoting the CEO of KIIFB, KM Abraham, that the Rs2,150 crore raised through the masala bond has already been repaid or (will be paid shortly).
It was on Monday (April 01), the Supreme Court refused an interim relief for Kerala in its case against the Centre seeking higher borrowing limits. There were also reports that the case has been referred to the Constitution Bench to be considered later.
It may be pertinent to mention here that the focal point of the dispute between the Centre and Kerala as regards the latter’s borrowing limit revolves around the borrowings made by KIIFB as well as Kerala Social Security Pension Ltd (KSSPL).
While the state Chief Minister, Pinarayi Vijayan and the Finance Minister, KN Balagopal, vehemently argued against including the borrowings made by KIIFB and KSSPL in the state’s own borrowings, Centre, upholding the Fiscal Responsibility and Budget Management Act (2003), took the firm stand that these borrowings are as good as government borrowings.
Long way to go
Anyway, experts in this field aver that the stand taken by the Centre and Supreme Court in this regard has raised serious concerns for the state’s going forward.
The financial headwinds faced KIIFB in its future journey also can’t be easily ignored. While the projects announced so far by KIIFB are worth a whopping Rs82,454 crore, the total disbursals as of end-February (2024) stand at a much lowerRs28,023 crore, a huge gap of close to Rs55,000 crore, which certainly leaves much to be desired.’
Moreover, the velocity of disbursal of funds in the recent past also raises serious questions. The past close to one year witnessed a disbursal of only close to Rs4,400 crore from KIIFB, against a target completion gap of about Rs55,000 crore.
A KIIFB documents demonstrates that while the government contribution to KIIFB so far amounts to Rs17,902 crore, the fund mobilized from the financial markets stand at Rs21,221 crore as of February end, 2024.
