White Paper on Kerala finances calls for KIIFB overhaul, forensic audit of accounts

Account subscription benefits alongside Premium Stories, Editorials, Opinions and more. Unlock these with Subscription

The View From India Looking at World Affairs from the Indian perspective.

First Day First Show News and reviews from the world of cinema and streaming.

Today's Cache Your download of the top 5 technology stories of the day.

Data Point Decoding the headlines with facts, figures, and numbers

Health Matters Ramya Kannan writes to you on getting to good health, and staying there

The Hindu On Books Books of the week, reviews, excerpts, new titles and features.

representational image | Photo Credit: Getty Images/iStockphoto

The White Paper tabled in the Kerala Assembly by Chief Minister V.D. Satheesan on Thursday has recommended a thorough overhaul of the Kerala Infrastructure Investment Fund Board (KIIFB), observing that the institution’s “fundamental premise has been undermined.”

The White Paper has recommended a revamp of the KIIFB Act, 2016, and a forensic audit of KIIFB accounts. However, it would be “wasteful” to dismantle the KIIFB framework which has built valuable capabilities over the years, the document, ‘Kerala’s Fiscal Health: A Status Report,’ noted. These capacities should instead be absorbed into or made available to government departments to improve project preparation and implementation quality, it said.

“The question is no longer whether KIIFB should continue in its current form - the Comptroller and Auditor General (CAG) ruling has effectively answered that. The question is how to manage the transition: honouring committed liabilities, retaining institutional capacity, amending the legal framework, and ensuring that the costs accumulated are transparently accounted for and prudently managed in the years ahead,” the document noted.

The White Paper advises against continued diversion of State revenue into an escrow account. Instead, KIIFB should be directed to utilise budgetary borrowings to meet its committed liabilities, it said. Moreover, KIIFB should not be permitted to borrow independently from external sources. The Finance Department should borrow at more favourable terms and channel the funds to KIIFB to meet its financial obligations.

The document, prepared by a committee headed by former Union Cabinet Secretary K.M. Chandrasekhar, described KIIFB as “a bold institutional innovation - an attempt to create a professionally managed, market-facing infrastructure financier that could bypass the fiscal constraints binding the State budget.” However, it’s fundamental premise now stands undermined, it noted.

The