KIIFB facing restructuring following committee report on debt model

The Kerala government is reviewing the future of the Kerala Infrastructure Investment Fund Board (KIIFB) following a report by a committee led by former Planning Commission member-secretary Sudha Pillai. The committee recommended that KIIFB cease market borrowings and stop funding projects in its current form, citing that its financing model functions as off-budget borrowing that bypasses constitutional limits. The report suggests the state repay KIIFB’s debts and transfer ongoing projects to respective government departments.

Chief Minister VD Satheesan stated that the board functioned as an “independent empire” that bypassed government and finance department controls, leading to irregularities in land acquisition and consultancy payments. He noted that borrowing at higher interest rates and specific bond issuances resulted in significant financial losses. The state may require approximately 70,416 crore to repay loans and complete prioritized projects, with repayments extending to 2041-42.

Economists and former officials have offered differing perspectives on the proposed changes. Some suggest KIIFB should be retooled into a project development and financing facilitation agency rather than being dismantled entirely, to preserve its technical expertise. Conversely, former state finance minister TM Thomas Isaac warned that weakening KIIFB and relying solely on regular budgetary allocations could set the state’s development back by 25 years, arguing that the board’s liabilities are balanced by the public assets it has created.