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FINANCING
Example for a best practice in financial resource
mobilization at local level : A case of KIIFB
04-Oct-17
KERALA INFRASTRUCTURE INVESTMENT FUND BOARD
The Fund was established with the main objective of providing investment for projects in the
State of Kerala in sectors like Transport, Water Sanitation, Energy, Social & Commercial
Infrastructure, IT and Telecommunication etc. KIIFB will assist the Government and its agencies
in the various aspects pertaining to Infrastructure Development and will act as the nodal agency
for scrutinizing, approving and funding major infrastructure projects including PPP projects.
With the restructured and rejuvenated KIIFB the future looks bright for the development of key
infrastructure in Kerala.
FINANCIAL RESOURCE MOBILIZATION BY KIIFB
To execute the slew of projects proposed in the last two budgets by mobilizing funds through
the Kerala Infrastructure Investment Fund Board (KIFB), the LDF government faces an uphill
task of raising extra-budgetary resources worth Rs 40,000 crore.
This amount is equal to 33 percent of the estimated total expenditure for the fiscal 2017-18.
Despite widespread apprehensions over the viability of the plans to raise such a huge amount
outside the budget through KIIFB, finance minister Thomas Isaac has exuded confidence about
the potential of the alternative method which will act as the prime Special Purpose Vehicle
(SPV) for mobilizing and channeling funds to various infrastructure projects.
Fund mobilization
So far, the total amount collected via cess on fuel and motor vehicle registration charges has
reached Rs 2,000 crore. Bonds will be issued to raise more extra-budgetary funds. The
estimated amount to be mobilized via the Kerala State Financial Enterprises (KSFE) NRI chit
funds is Rs 12,000 crore.
In total, the government is looking to raise as much as Rs 50,000 crore in five years with the
help of these specific resource mobilization means. Though the proposals under KIIFB were
announced in the Budget, they will remain outside the budgetary framework for the very
reason that the funding will be done via extrabudgetary sources.
The execution
The idea is great and ambitious, but it is to be seen how the government which is grappling
with an acute financial crisis is going to mobilize such a huge fund through an innovative
method like KIIFB.
The government has roped in former Comptroller and Auditor General (CAG) of India Vinod Rai
to head the KIIFB advisory commission in a bid to the boost the states image as an investor-
friendly destination. The chief minister also has high hopes on KIIFB, especially after the idea
received appreciation and positive feedback from his financial advisor Gita Gopinath.