KIIFB and the promise

Kerala Infrastructure Investment Fund Board [KIIFB] has been drawing news headlines for a long time. It was mostly for all the good that it was doing. But recently it is all for the wrong reasons.

Kerala Infrastructure Investment Fund Board [KIIFB] has been existing since 1999. In 2016, the current government reconstituted the organisation to a corporate body enabling it to attract investments to the state to fund infrastructure development projects. Kerala government is guaranteeing most part of the payments to KIIFB. It’s like, if KIIFB funds a road project, Kerala government will return the money to KIIFB in instalments over the years. KIIFB will attract investments globally at competitive rates making the cost of funds to the government much better than what is otherwise available from financial institutions in India.

The need for such a novel financial intervention was the debt pile Kerala was carrying. The fiscal norms in India were not allowing the Kerala government to take more debts. Here, the debt is taken by a corporate body for whom the Kerala government is a promoter as well as the customer. Hence the debt is not identified as that of the Kerala government. The intentions are good, the execution is smart. The entity was able to attract experienced luminaries from the financial sector to guide and run it. They brought with them the credibility. The entity did attract huge sums of money from global markets through various bonds at very competitive rates.

Time can only testify the performance of KIIFB. If the investments they make did not give timely returns, KIIFB will not be able to return the money to its investors. As a promoter, the Kerala government will have to take the burden to meet the financial obligations world over. Hence the role being played by the luminaries in the entity is crucial. The decisions they make and the diligence they do determines the success of the initiative and the entity. Else, it will only add to the debt burden of the people in Kerala, which as per estimates is 1 lakh per individual!

It would take another 3 to 5 years for us to critically judge the performance of KIIFB against the promises they made. Till then, the public is burdened to identify the victim and the culprit among all the allegations around it.

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