KIIFB has left Kerala with liabilities of Rs 70,415 crore, says expert committee report

THIRUVANANTHAPURAM: The liabilities incurred by the Kerala Infrastructure Investment Fund Board (KIIFB) for loan repayments and the completion of projects over the coming years stand at Rs 70,415.54 crore, according to an expert committee report. Loan repayments will continue until 2041-42. This estimate does not include land acquisition costs. The report also observed that KIIFB's functioning over the past 10 years had weakened the administrative systems and capacity of government departments.

The high interest rates on loans resulted in an additional annual expenditure of Rs 396 crore. The Masala Bond also led to an extra expenditure of Rs 181.73 crore. Since 2022, KIIFB's borrowings have been included in the state's borrowing limit. The Finance Department had therefore decided that the government need not provide guarantees for these loans. However, at a meeting held on June 6, 2023, under the chairmanship of the then Chief Minister, this decision was overruled. The report pointed out that only the Cabinet had the authority to overturn the Finance Department's decision.

The report also identified serious violations of rules, including the former KIIFB CEO serving as an ex-officio secretary, lack of transparency in payments to consultants and irregularities in land acquisition.

Funds borrowed at high interest rates remained unused

The report raised concerns over funds borrowed at high interest rates being kept unused for months. While the Public Works Department received 52.6 per cent of the funds, only 0.18 per cent was allocated to projects for Scheduled Caste and Scheduled Tribe communities.

Other major findings included:

• KIIFB appointed 498 people against the 40 posts originally sanctioned.
• The Centre cut Kerala's borrowing limit by Rs 25,932.55 crore on account of KIIFB loans.
• Project implementation resulted in an additional expenditure of Rs 13,103 crore.
• The report questioned KIIFB's investments of around Rs 5,821 crore despite the government's sovereign guarantee remaining in place.

Key recommendations

The expert committee has made several recommendations to address KIIFB's financial and administrative issues.

• Allocate funds in the state Budget for repayment of KIIFB loans.
• Replace high-interest loans with loans carrying lower interest rates.
• Make budgetary provisions to complete ongoing projects.
• Transfer the project appraisal division to the State Planning Board.
• Restructure the salary and service conditions of employees.
• Remove the CEO's authority to make appointments.