The State government on Monday reiterated its request for a favourable decision from the Centre regarding borrowings made by the Kerala Infrastructure Investment Fund Board (KIIFB).
The policy address by Governor Arif Mohammed Khan in the State Assembly noted that the Centre’s decision to include loans taken by KIIFB in the State’s overall borrowing limit severely restricts the State’s borrowing capacity. It would reduce the fiscal space of the government, affecting development priorities and putting strain on resources. The policy address expressed the hope that the Union government would address the question of fiscal federalism in a ‘‘very positive way.’‘
Source of funds
Earlier, the State government had submitted a memorandum to the Centre in this regard. KIIFB has contributed to infrastructure development using funds from the government by way of motor vehicle tax and petroleum cess, in addition to loans totally ₹19,197 crore from domestic and financial markets.
‘’The funding through KIIFB for infrastructure projects has been crucial in reversing the COVID-induced economic catastrophe,’‘ the policy address said.
KIIFB, chaired by the Chief Minister, has cleared 993 projects with a total outlay of ₹73,908 crore. Of this, 593 projects worth ₹27,620 crore have been tendered and 120 projects (₹6,201 crore) have been commissioned. The policy address also reiterated the government’s plans to enhance the total loan size of the Kerala Financial Corporation to ₹10,000 crore in the next two years. As of September 2022, it stood at ₹6,094 crore.