'KIIFB bypasses govt's borrowing limits, not adhering to constitutional provisions': CAG

The State government was hit back by the Comptroller Auditor General (CAG) over Kerala Infrastructure Investment Fund Board (KIIFB), which it termed is not adhering to constitutional provision and "bypass the limits set on Government borrowings under Article 293 of the Constitution of India".

On Monday, the 'State Finance Audit Report' by the CAG was tabled in Kerala Assembly by Finance Minister Thomas Isaac, who had earlier criticise the report in public and shared details for which he is facing an inquiry by Assembly Privilege and Ethics Committee.

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The CAG in its report found out that KIIFB's case violates the provisions in the constitution and is a classic case of off-budget borrowings.

"As the state government chooses to raise funds in the name of KIIFB, and the debt is to be discharged from its own revenue, such as cess on petroleum and a part of the motor vehicle tax, then the State government has definitely created a liability on its own revenue resources. This is a classic case of off-budget borrowings, which firstly, bypasses the limits set on government borrowings under Article 293 of the Constitution of India and secondly, it violates the provision of entry 37 of List I," said CAG in its audit report.

The report also stated that such borrowings for all practical purposes, represent the fiscal deficit of the state and should be treated as such. However, Issac all along has argued that it is not a liability to the state as the state is not directly borrowing.

"Creating such liabilities, without disclosing them in the budget, raises questions both of transparency, and of inter-generational equity. Merely because the borrowing is not shown in the budget does not mean that the liability of discharging it from the State revenues will disappear," argued the report.

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The audit report also criticised the 'Masala Bonds'undertaken by KIIFB on its check of debts experienced by the state government. Till 2018 to 2019 KIIFB borrowed and raised funds amounting to Rs 33,106.57 crores from financial institutions by the issue of bonds, which were to be re-paid by the Kerala government from its own revenue resources for transfer to KIIFB.

"KIIFB borrowed and raised funds amounting to Rs 33,106.57 crores from financial institutions till 2018-19 by the issue of bonds, which were to be re-paid from the petroleum cess and part of motor vehicle tax set apart by the Kerala government from its own revenue resources for transfer to KIIFB.

Meanwhile, Kerala Finance Minister who had contented the report all the while had presented the audit report with an objection note. The opposition Congress-led UDF objected to the note by Isaac by calling it unprecedented. 

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Union Minister V Muraleedharan's reaction

Union Minister V Muraleedharan said in a series of tweets that the CAG report was "a tight slap on the corrupt regime of Vijayan Pinarayi. CAG report tabled in Kerala Assembly, on the KIIFB stated that Chief Minister Office Kerala used it against the Constitution of the country by flouting norms.

He accused Pinarayi government that they have deliberately entered into the Union government domain

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(With ANI Inputs)