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White Paper questions KIIFB model but stops short of calling for closure

2 min Last Updated: 05 June, 2026 | 12:02 AM IST

THIRUVANANTHAPURAM: The White Paper presented by the state government has criticised the functioning of the Kerala Infrastructure Investment Fund Board (KIIFB), which was introduced by the previous Left government to finance infrastructure projects. However, the report does not recommend shutting down KIIFB. Instead, the White Paper says KIIFB should continue to function with stronger financial discipline, greater transparency, and proper monitoring to ensure that the funds it raises are managed responsibly.

Chief Minister VD Satheesan presented the report in the Assembly on Thursday. The report states that although KIIFB was a bold initiative designed to overcome the financial limitations of the state budget, its original purpose has been undermined over time. According to the White Paper, KIIFB's borrowings are now effectively treated as government debt. It also points out that the cost of raising funds through KIIFB is 1 to 1.5 percentage points higher than borrowing directly by the state government.

KIIFB has approved infrastructure projects worth more than Rs 1 lakh crore. Of these, projects worth Rs 25,000 crore have been completed, while payments totalling Rs 41,610 crore have already been made. The report says funding still needs to be arranged for projects worth Rs 35,000 crore. When combined with KIIFB's outstanding debt repayment obligations of Rs 21,000 crore, the agency is facing a total financial liability of around Rs 56,000 crore.

KIIFB was originally established to accelerate infrastructure development without exceeding Kerala's borrowing limits. However, the White Paper argues that it gradually evolved into a parallel government structure with its own borrowing programmes and debt obligations.

The report also notes that KIIFB lacks its own independent revenue source, sufficient regulatory controls, and effective oversight mechanisms. According to the White Paper, this creates three major risks for Kerala's financial management.

First, it weakens the state's fiscal discipline. Second, debt repayments are linked to state revenues such as the petroleum cess and motor vehicle tax, meaning any decline in these revenues could directly affect the treasury. Third, keeping KIIFB's liabilities outside the regular budget framework may hide the true extent of the state's financial obligations.

KIIFB revenue sources (as of March 31)