Thiruvananthapuram, Oct 21 (IANS) Fresh revelations on Wednesday that two successive Finance Department principal secretaries had warned against KIIFB’s excessive borrowings have added urgency to the V.D. Satheesan government’s move to order a probe into the state’s infrastructure financing agency.
The government is preparing to announce an investigation into the functioning of the Kerala Infrastructure Investment Fund Board (KIIFB), with the key question being which agency should conduct the probe.
Chief Minister Satheesan has already gone on record saying that an investigation is warranted, following the submission of an expert committee report that was tabled in the Kerala Assembly last week.
The latest documents that have come out in the public domain show that Ravindra Kumar Agarwal, who succeeded the present Chief Secretary Biswanath Sinha as Finance Department Principal Secretary, had recorded serious reservations about KIIFB’s borrowing in an official file in October 2023.
Agarwal warned that KIIFB’s borrowings were affecting the state government’s overall borrowing limit and could constrain funds available for routine expenditure.
Describing borrowing through KIIFB in a manner that reduced the government’s own borrowing capacity as ‘not a prudent decision’, he called for policy-level corrections and warned that failure to cut expenditure could trigger a severe financial crisis in the coming years.
His observations followed similar warnings by Sinha at a meeting in June 2023.
Sinha had cautioned that KIIFB’s high-interest borrowings would impose a substantial burden on the state exchequer, affect Kerala’s borrowing limit and potentially force cuts in funding for future development projects.
The two officers’ observations raise questions about why the government proceeded with KIIFB’s borrowing plans despite the concerns recorded by senior bureaucrats.
The plans proposed by KIIFB CEO K.M. Abraham had received the backing of the then Finance Minister K.N. Balagopal and former Chief Minister Pinarayi Vijayan.
KIIFB, established as a major vehicle for financing infrastructure projects outside the conventional budgetary framework, has been central to the previous LDF government’s development strategy.
However, its borrowing and the resulting interest liabilities have become a contentious issue amid Kerala’s mounting fiscal pressures.
With CM Satheesan signalling that a probe is necessary, attention has shifted to the choice of investigating agency and the extent to which the inquiry will examine the decisions that allowed KIIFB’s borrowing to continue despite repeated official warnings.
–IANS
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