The State Government on Friday appeared to find itself at loggerheads with the Comptroller and Auditor General of India (CAG) over Kerala Infrastructure Investment Fund Board (KIIFB) again.
Finance Minister K.N. Balagopal strongly objected to the CAG’s latest finding that KIIFB’s “off-Budget borrowings” via masala bonds and other instruments to “finance expenditures” violated the Kerala Fiscal Responsibility Act.
The CAG had tabled its State Finance Audit report ended 2020 in the Assembly on Thursday. For the second consecutive financial year, the CAG had observed that KIIFB’s borrowings lacked legislative approval or scrutiny and warned the State could find itself caught in a debt trap.
The CAG had also questioned the constitutionality of raising loans through government-controlled entities such as the Kerala Social Security Pension Ltd (KSSPL) to bypass the Net Borrowing Ceiling of States.
The CAG had also rejected the State;s contention that KIIFB’s bid to raise funds from foreign financial markets to fund essential infrastructure development had legislative approval. They were not outside Budget borrowings.
Mr. Balagopal said the CAG had merely echoed the findings in the previous audit reported ended 2019. The Assembly had rejected the findings. “It’s anybody’s guess why the CAG is reiterating its erroneous stance,” he said.
Oppn. charge
Congress leader Ramesh Chennithala slammed the Government for undermining the CAG. He said the Constitutional authority had correctly pointed out that KIIFB's loans and spendings were beyond the pale of the legislature. They were excluded from budget documents and not subject to legislative scrutiny.
Moreover, the KIIFB drew on State’s revenue stream to pay back its rising debt. Finally, the common folk would have to pick the tab for KIIFB's financial excesses.
Mr. Chennithala said the CAG findings had validated the stance of the Opposition that the KIIFB was patently unconstitutional, he said.
The CPI(M) had doubted the CAGs findings as politically biased and damaging to the developmental aspirations of the State.
It felt that CAG’s observations chipped away at the financial trustworthiness of KIIFB, a body corporate created by an act of law.
Meanwhile, the CAG also drew fire from the CPI(M) for questioning the State’s preparedness and response to floods during the 2014-19 period. Former Power Minister M.M. Mani denied the CAG’s “insinuation” that poor dam management had caused the 2018 floods.
