KIIFB Borrowings Reduced Kerala’s Borrowing Limit by Rs 25,932 Crore: CM

Kerala Chief Minister V D Satheesan on Thursday said an expert committee headed by Sudha Pillai had flagged financial irregularities, procedural violations and substantial liabilities in the functioning of the Kerala Infrastructure Investment Fund Board (KIIFB), established under the previous Left government.

Addressing a press conference after the report was tabled in the Assembly, Satheesan said the committee estimated Rs 13,103 crore in excess expenditure on projects undertaken through KIIFB compared with the cost had the government executed the same works directly.

He said the findings vindicated the Congress's longstanding concerns over off-budget borrowings and their impact on the state's finances. The government would examine the report before deciding on further action, including a possible investigation.

Satheesan alleged that KIIFB operated as a "separate empire", bypassing the Finance Department and violating the Rules of Business in key decisions. He claimed the board's borrowings had led to a Rs 25,932.55-crore reduction in Kerala's borrowing limit. He also said 99.4 per cent of funds transferred by the government to KIIFB had been used for loan repayments.

According to the committee's estimates cited by Satheesan, higher borrowing costs created an additional annual interest burden of Rs 396 crore. Excess expenditure on this account was estimated at Rs 1,250 crore, while losses linked to masala bonds were put at Rs 181.73 crore. The chief minister also raised concerns over land acquisition, saying KIIFB had approved the acquisition of 5,366 acres at a cost of Rs 27,727 crore. Of the approximately 1,000 acres acquired in Kannur, only around 50 acres had been put to use, he claimed.

The report also pointed to regional imbalances, with 41.6 per cent of projects concentrated in three of the state's 14 districts. Satheesan alleged that KIIFB's borrowing model had aggravated Kerala's financial difficulties. However, he said its projects could not simply be stopped, noting that the state's guarantees covered the liabilities. He further alleged that an internal audit had flagged irregularities in KIIFB's publicity fund, including expenditure during the election period.