Thiruvananthapuram, Oct 15 Keralam Chief Minister V D Satheesan on Thursday said a panel headed by Sudha Pillai, which reviewed the KIIFB promoted by the previous Left government, had flagged serious financial irregularities, violations of rules and huge financial liabilities.
Alleging that the Kerala Infrastructure Investment Fund Board (KIIFB) was functioning as a ‘separate empire’, the CM said the state government would examine the findings of the expert panel report and decide on further action.
Addressing a press conference hours after the report was tabled in the Assembly, Satheesan said the findings supported the longstanding concerns expressed by the Congress, when it was in opposition, about off-budget borrowings and their impact on the state’s finances.
He said the committee had estimated excess expenditure of Rs 13,103 crore on projects undertaken through the KIIFB, compared with what the government would have spent had it executed the same works directly.
Asked about further action on the report, Satheesan said the government will examine its findings and decide on the appropriate course of action, including the nature of any investigation.
“We shouldn’t find the accused beforehand, right? We can look at that and do it,” he said, indicating that the government would consider the matter after examining the report.
Satheesan said the committee had raised concerns over KIIFB’s loan repayments, citing figures that he said showed that 99.4 per cent of the funds transferred by the government had been used for repaying loans.
He said KIIFB’s borrowings had affected the state’s borrowing capacity, resulting in a reduction of Rs 25,932.55 crore in Kerala’s borrowing limit.
“The opposition (Congress) had strongly pointed out during the presentation of the KIIFB Bill itself that this would become a debt liability for the state,” he said, adding that the liabilities had now become a burden on the government.
Satheesan alleged that KIIFB had bypassed the Finance Department and violated the Rules of Business in several key decisions.
He cited a meeting chaired by the chief minister on June 6, 2023, which decided to provide guarantees for KIIFB loans despite the Finance Department’s recommendation against doing so.
According to Satheesan, Rule 10(2) of the Rules of Business requires Cabinet approval to override the Finance Department’s decision.
The committee also estimated that KIIFB’s higher borrowing costs resulted in an additional annual interest burden of Rs 396 crore compared with the government’s open market borrowings.
The total excess expenditure on this account was put at Rs 1,250 crore, while the loss linked to masala bonds was estimated at Rs 181.73 crore.
On land acquisition, Satheesan alleged serious irregularities, particularly in Kannur and Palakkad. He said KIIFB had approved the acquisition of 5,366 acres at a cost of Rs 27,727 crore.
Around 1,000 acres had been acquired in Kannur, but only about 50 acres had been put to use for an industrial park and another requirement over the past five years, he said. A further 3,829 acres had been notified for acquisition, he added.
The report also highlighted regional imbalances, with 41.6 per cent of projects concentrated in three of Keralam’s 14 districts, Satheesan said.
The chief minister alleged that the KIIFB model was a major reason for the severe financial crunch faced by Keralam, adding that the state government itself was on the verge of collapse.
He said KIIFB’s indiscriminate borrowings had put the state government under pressure, as the Centre imposed restrictions on its borrowing limit.
He alleged that KIIFB lacked even the pace of ordinary government agencies in implementing projects.
KIIFB functioned as an independent empire that bypassed the control of the government and the Finance Department and created massive financial liabilities, the CM further alleged.
“This is a separate empire. A completely different empire,” Satheesan said while replying to reporters’ queries.
However, he made it clear that KIIFB’s projects could not be stopped on a fine morning by anyone. The entire debt liability had been incurred with the state government’s guarantee, the CM added.
Satheesan also claimed that an internal audit found irregularities in the publicity fund utilised by KIIFB. He alleged that the fund was spent during the election period.
(PTI News)
