KIIFB borrowing: Former Minister Balagopal had expressed concerns, but Pinarayi government went ahead

THIRUVANANTHAPURAM: A report has claimed that former Finance Minister K.N. Balagopal had expressed concerns over the borrowing undertaken by the Kerala Infrastructure Investment Fund Board (KIIFB) during the previous government's tenure. Balagopal had pointed out that the borrowing could affect the state's financial position. However, the government went ahead with the borrowing plans despite his concerns. A file containing Balagopal's remarks on the matter has now come to light.

The decision to proceed with the borrowing despite the Finance Minister's reservations was taken on the instructions of then Chief Minister Pinarayi Vijayan. An expert committee had recently found that KIIFB's borrowing had pushed the state into a debt trap. The committee has included Balagopal's observations in its report.

According to the expert committee report, the state's financial liability arising from KIIFB will reach Rs 70,415.54 crore in the coming years towards loan repayment and the completion of projects undertaken by the board. Loan repayments will continue until 2041-42. The amount does not include land acquisition costs. The report also pointed out that KIIFB's functioning over the past 10 years had weakened the administrative systems and capacity development of government departments.

The higher interest rates on loans resulted in an additional annual expenditure of Rs 396 crore. The Masala Bond also led to an additional expenditure of Rs 181.73 crore. Since KIIFB's borrowings were brought under the state's borrowing limit from 2022, the Finance Department had decided that the government need not provide guarantees for these loans. However, this decision was overruled at a meeting chaired by the then Chief Minister on June 6, 2023. Only the Cabinet has the authority to override a Finance Department decision.

The expert committee also flagged serious violations of rules, including the former KIIFB CEO functioning as an ex officio secretary, lack of transparency in payments made to consultancy firms and irregularities in land acquisition.