The bedrock on which key elements of the revised 2016-17 budget has been built up by Finance Minister T.M. Thomas Isaac is the Rs.12,000-crore fiscal package aimed at mitigating the impact of the economic slowdown which has the State economy in its grip.
The package, a follow-up on the Rs.5,000-crore package announced by Dr. Isaac in his 2008-09 budget, would be utilised exclusively for big ticket infrastructure initiatives, including construction of roads, bridges, commercial condominiums and industrial parks. As much as Rs.8,000 crore would be spent outside the package for land acquisition alone by the end of the coming financial year, taking the total size of the package to Rs.20,000 crore, Dr. Isaac said.
Dr. Isaac said legislative measures would be taken to empower the Kerala Infrastructure Investment Fund Board (KIIFB) to launch novel resource mobilisation initiatives in tune with the norms set by Reserve Bank of India (RBI) and the Security and Exchange Board of India (SEBI).
The board would have a Funds Trustee Advisory Committee chaired by an internationally acclaimed expert in finance and comprising economists, bankers and administrators of national repute as members. The functioning of KIIFB would be subject to fidelity certificates to be issued every six months.
Tax share for board
The Kerala Motor Vehicles Act would be amended to provide for routing of a share of tax to the KIIFB fund.
Beginning with 10 per cent, as much as 50 per cent of the motor vehicle tax would be routed to the fund by the fifth year. The cess on petrol would also go to KIIFB. Steps would also be taken to ensure that resources meant for Viability Gap Funding (VGF), receivables from the government and the funds meant for repaying investors reach the KIIFB on the last working day of August every year.
Guarantee ceiling
The 2003 Ceiling on Government Guarantees Act would be amended to lift the ceiling on the amount for which the government can stand guarantee. The amount mobilised by KIIFB would not be remitted in the State exchequer and will not be spent through government departments. Surplus of KIIFB funds would be invested in triple rated assets.
The government would issue bonds to suit each project.
Thus, General Obligation Bonds (GO Bonds) would be issued with government guarantee to finance Special Purpose Vehicles (SPVs) for meeting the investment needs of the Kerala Water Authority (KWA) and KSEB Limited.
Revenue Obligation Bonds (RO Bonds) would be issued for financing projects with specific returns.
Term loans
The KIIFB would also raise term loans from commercial and cooperative banks and use instrumentalities for resource mobilisation approved by the RBI and SEBI such as Alternative Investment Funds (AIF), Infrastructure Investment Trust (INVIT) and Infrastructure Debt Fund (IDF). Funds would be released in three-month tranche based on clear statement of anticipated expenditure. This would ensure that payments are made on time to the contractors.
