Kerala Assembly building (file)
| Photo Credit: Special Arrangement

The ruling front and the Opposition wrangled in the Kerala Assembly on Monday (February 10, 2025) over whether the Kerala Infrastructure Investment Fund Board (KIIFB) was a troublesome and expensive “borrowing entity” that pushed the State into an abyss of debt or a powerful engine for development.

The debate during Zero Hour culminated in a Congress-led United Democratic Front (UDF) walkout.

Seeking the Assembly’s permission for an adjournment debate on whether the KIIFB had become a “white elephant,” Congress legislator Roji M. John stated that the special purpose vehicle, designed to catalyse infrastructure development through out-of-Budget borrowings at an “extortionate” interest rate from the open financial market, had significantly increased the State’s public debt burden with little tangible benefit. 

“KIIFB promised a land of milk and honey. Instead, it rendered Kerala debt-ridden,” he added.

Mr. John said KIIFB drew heavily on the State’s consolidated funds (motor vehicles tax and petroleum cess) to “stay afloat”. Nevertheless, KIIFB was not subject to audit by the legislator or the CAG.

Leader of the Opposition V.D. Satheesan said KIIFB had executed less than 20% of the projects it initiated. “It has rendered other departments, chiefly the Public Works department, redundant,” he said.

Mr. Satheesan said the government wanted the people to pick the tab for KIIFB’s “rapidly accruing losses” by proposing a toll on roads.

He accused the LDF of taking a page from the BJP’s playbook by using KIIFB as “a pretext” to abandon plan funding and prioritise project funding, a fiscal gambit that allowed governments to circumvent constitutionally mandated social welfare-oriented spending policy, including for SC/ST communities, rural development, health, education, child welfare, potable water and power.

Finance Minister’s response

Finance Minister K.N. Balagopal retorted that the UDF was “playing into the BJP’s hands” by seeking to “strangle” KIIFB.

Mr. Balagopal said the Congress had timed its latest fusillade against KIIFB when the Supreme Court’s Constitutional Bench was scheduled to hear whether Kerala had an enforceable right under Article 293 of the Constitution to raise its borrowing limit, including from the Central government and other open market sources.

He said Kerala, including other non-BJP-ruled States, had protested the 15th Finance Commission’s contentious recommendation to limit the net borrowing ceiling (NBC) of States to 3% of the gross State domestic product (GSDP), a criteria “that seemed not to apply to the Union government.”

Mr. Balagopal also sought to inject politics into the debate. “The Congress gave a leg-up to the BJP in the Delhi Assembly elections by fielding candidates (against the Aam Aadmi Party). It weakened the anti-BJP INDIA bloc accord,” he said.

Speaker A.N. Shamsheer denied the Opposition’s plea for adjournment debate.