Thiruvananthapuram, June 4 (IANS) The Kerala Infrastructure Investment Fund Board (KIIFB), once projected as the state’s alternative engine for infrastructure development, has come under sharp scrutiny in the White Paper on the state’s finances, with the document raising serious concerns over its debt burden, borrowing costs and project priorities.

The White Paper, tabled in the Assembly by Chief Minister V.D. Satheesan, states that the KIIFB was created with the primary objective of mobilising funds outside the normal budgetary borrowing limits of the state.

However, a ruling by the Comptroller and Auditor General (CAG) in 2024-25 that KIIFB borrowings are effectively state borrowings has, according to the report, “ended its original purpose entirely”.

The document points out that the KIIFB’s borrowings have come at a higher cost compared to direct state borrowing.

The interest rates on KIIFB loans have remained around 1 to 1.5 percentage points above the state’s own borrowing rates in most years, resulting in avoidable additional expenditure estimated at around Rs 420 crore annually.

The White Paper highlights a combined KIIFB obligation of nearly Rs 56,000 crore, comprising around Rs 21,000 crore in pending loan repayments and nearly Rs 35,000 crore worth of projects already approved but without assured funding.

While acknowledging that the KIIFB has created institutional capacity in project appraisal, monitoring and inspection, the report suggests that these strengths should be integrated into the government system instead of allowing the institution to continue as a separate borrowing mechanism.

The document has also questioned the geographical and social distribution of KIIFB-funded projects.

It states that project approvals and payments are heavily concentrated in certain districts, with Kannur accounting for nearly 20 per cent of approvals and 19 per cent of payments.

Three districts together account for almost half of the KIIFB expenditure, despite the report noting that such concentration is not supported by human development or economic need indicators.

The White Paper has also raised concerns over the limited focus on marginalised communities. The KIIFB’s spending for Scheduled Caste and Scheduled Tribe departments accounts for only 0.07 per cent and 0.02 per cent, respectively, of total approvals, indicating that these sectors have not received meaningful attention through the mechanism.

Satheesan said the White Paper was not an investigation report but an effort to place the state’s fiscal position before the public and initiate a discussion on the way forward.

Among the immediate measures suggested are bringing the KIIFB fully under budgetary control and conducting a forensic audit of its functioning and liabilities.

The findings have opened a fresh debate over whether the KIIFB, once showcased as a major financial innovation for Kerala, has now become a fiscal challenge requiring restructuring.

–IANS

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