KIIFB borrowings have no legislative nod: CAG report
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The off-budget borrowings made by the Kerala Infrastructure Investment Fund Board (KIIFB) for funding infra initiatives has bypassed the bounds set on Government borrowings underneath Article 293 (1) of the Constitution and such borrowings don’t have legislative approval, the Comptroller and Auditor General of India has opined.
The off-budget borrowings of KIIFB are “not in accordance with the Constitution”. The borrowings are usually not taken into the disclosure statements within the finances paperwork or within the accounts, the CAG has famous within the “State Finance Audit Report for the year ended March 2019 that was laid in the Legislative Assembly on Monday.
KIIFB had borrowed and raised funds amounting to ₹3,106.57 crore from financial institutions till 2018-19 by issue of bonds which were to be repaid from petroleum cess and motor vehicle tax . An amount of ₹2,150 crore raised through Masala Bonds in foreign countries is part of the ₹3,106.57 crore off-budget borrowings.
“Since KIIFB has no source of income, the borrowings by KIIFB for which the State stood as guarantor, may ultimately turn out to be a direct liability of the State Government,” the CAG has identified.
Stating that such borrowings characterize fiscal deficit of the State and ought to be handled as such, the CAG has mentioned “Creating such liabilities, without disclosing them in the budget raises questions both of transparency, and of inter-generational equity”.
The approval given by the RBI to KIIFB to challenge Masala bonds can also be questionable because the nod has allowed the State to route its personal borrowing by way of KIIFB. If the mode is adopted by different States, the CAG mentioned the exterior liabilities of the nation will rise considerably with out the Centre understanding of making such liabilities.
The CAG report has already grow to be controversial after the Finance Minister, T. M. Thomas Isaac revealed the contents at a press convention final 12 months earlier than tabling it within the Legislative Assembly alleging that the CAG had violated procedures within the preparation and submission of the report on State’s Finances.
Dr. Isaac, in his observations whereas tabling the CAG report, mentioned the feedback have “incalculable potential to hurt the interests of the State gravely and cause detriment to the development vision that the Government had drawn for the people”.
