The White Paper tabled in the Kerala Assembly by Chief Minister V.D. Satheesan on Thursday has recommended a thorough overhaul of the Kerala Infrastructure Investment Fund Board (KIIFB), observing that the institution’s “fundamental premise has been undermined.”
The White Paper has recommended a revamp of the KIIFB Act, 2016, and a forensic audit of KIIFB accounts. However, it would be “wasteful” to dismantle the KIIFB framework which has built valuable capabilities over the years, the document, ‘Kerala’s Fiscal Health: A Status Report,’ noted. These capacities should instead be absorbed into or made available to government departments to improve project preparation and implementation quality, it said.
“The question is no longer whether KIIFB should continue in its current form - the Comptroller and Auditor General (CAG) ruling has effectively answered that. The question is how to manage the transition: honouring committed liabilities, retaining institutional capacity, amending the legal framework, and ensuring that the costs accumulated are transparently accounted for and prudently managed in the years ahead,” the document noted.
The White Paper advises against continued diversion of State revenue into an escrow account. Instead, KIIFB should be directed to utilise budgetary borrowings to meet its committed liabilities, it said. Moreover, KIIFB should not be permitted to borrow independently from external sources. The Finance Department should borrow at more favourable terms and channel the funds to KIIFB to meet its financial obligations.
The document, prepared by a committee headed by former Union Cabinet Secretary K.M. Chandrasekhar, described KIIFB as “a bold institutional innovation - an attempt to create a professionally managed, market-facing infrastructure financier that could bypass the fiscal constraints binding the State budget.” However, it’s fundamental premise now stands undermined, it noted.
The White Paper noted that KIIFB borrowings are now State borrowings and that its financing costs are consistently higher than government borrowing rates. “Its project distribution reflects political rather than strategic prioritisation. And the State faces a combined obligation of roughly ₹56,000 crore in loan repayments and project funding commitments - a burden whose full weight is only beginning to b felt,” the White Paper said.
The White Paper has an interesting observation on the way KIIFB allocations have been made. The document notes that KIIFB’s prioritisation and distributional outcomes in terms of projects raise “serious questions.” Kannur district alone accounts for over 20% of total approved amounts and 19% of the payments released, it said
“Adding Thiruvananthapuram (17% approved, 17% released) and Ernakulam (11% approved and released), three districts absorb nearly half the total. Neither human development indices nor economic need indices provide an obvious justification for this concentration,” it said.
Published - June 04, 2026 10:53 am IST
Source: The Hindu - India News
