THIRUVANANTHAPURAM: The war of words between the Left Democratic Front (LDF) Government and the Comptroller and Auditor General (CAG) over the Kerala Infrastructure Investment Board (KIIFB) has taken a new turn.
The confrontation began when the CAG criticized KIIFB in its report placed on the table of the State Assembly. It observed that off-budget borrowings made by KIIFB and the Kerala Social Security Pension Limited (KSSPL) bypass the borrowing ceiling of the State. The CAG has said that the borrowings by both the entities are liabilities of the Government and should, therefore, be included in the annual budget.
The report says, “These off-budget borrowings are not taken into the disclosure statement in the budget documents or in the accounts, nor do they have legislative approval. They are used to finance government expenditure, the details of which are not reflected in the budget or finance accounts.” The borrowings, the report says, were ultimately the liabilities of the Government. The off-budget borrowings bypass the net borrowing ceiling (NBC) by routing loans outside the budget through government-owned or controlled companies/statutory bodies despite being responsible for repayment of such loans. Such borrowings will have an impact on the revenue and fiscal deficits and have the effect of surpassing the targets set for fiscal indicators under “The Kerala Fiscal Responsibility Act, 2003”.
KIIFB has, however, rebutted the CAG’s criticism saying that its findings are one-sided. KIIFB said it is not an off-budget borrowing mechanism. It is a financial institution that functions on an annuity model with healthy sources of revenue. Even the Union Government has resorted to similar transactions, the KIIFB’s clarification on Facebook page and website said.
KIIFB also refuted the charge that the State could land in a debt trap ultimately because of such borrowings. KIIFB is a body corporate formed with a view to mobilizing funds for development of infrastructure. It has been entrusted with infrastructure projects worth Rs 70,000 crore. Through law, the Government guarantees KIIFB 50 per cent of the motor vehicles tax and the entire petrol cess collection as growing annuity payment. Moreover, the KIIFB director board approves projects by making sure that the liabilities never exceed the revenue. At least 25 per cent of KIIFB projects are capable of generating revenue. As for repayments with interest, they are assured to KIIFB on loans issued to the Kerala State electricity Board, K-fone and industrial projects. This amount and the tax share assured by the Kerala Government will see that KIIFB never lands in a debt trap.
In a strongly-worded remark, Chief Minister Pinarayi Vijayan has said, without directly referring to the CAG, that some people with a “sadistic mentality’ were trying to undermine KIIFB. The CM accused them of trying to retard the progress of the State. But the Government, he averred, will go ahead with the projects funded by KIIFB. Significantly, the CM made his remarks while delivering the presidential address at the Chancellor’s Award presentation held at the Raj Bhawan and in the presence of Governor Arif Mohammed Khan. The CM said it was because of KIIFB’s mobilization of funds that the Government could strengthen the public education system. The benefits of this are there for all to see, opined Pinarayi in his first public reaction to the CAG’s criticism of KIIFB. KIIFB funds would be utilized to strengthen the higher education sector as well, Pinarayi added.
Responding to CAG’s criticism, State finance Minister K N Balagopal said the CAG was echoing the findings in the previous audit report ended 2019. The State assembly, he added, had rejected these findings. Balagopal wondered why the CAG is repeating its wrong stance. The Government, he said, was yet to receive the draft audit report. The Assembly Subjects Committee needs to examine the final report when it is submitted. He accused opposition leaders of leveling criticism based on leaked information, and asked them to refrain from doing so. (IPA Service)
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