The Comptroller and Auditor General’s (CAG) latest audit report on State finances reiterates observations on Kerala Infrastructure Investment Fund Board (KIIFB) borrowings that were earlier rejected by the Public Accounts Committee (PAC) and the Assembly, Finance Minister K.N. Balagopal has said.
The CAG’s State finances audit report for the year ended March 2021 and Mr. Balagopal’s observations on it were tabled in the Assembly on Wednesday. The Minister sought to defend the borrowings made through the KIIFB and Kerala Social Security Pension Ltd. (KSSPL), both of which have drawn criticism from the CAG for being ”off-budget borrowings” that could plunge the State into a debt trap later on.
Mr. Balagopal said borrowings by the KIIFB were on the basis of government guarantees and were, therefore, not direct liabilities of the State, They were only ”contingent liabilities” since the KIIFB also funded remunerative projects and generated its own income as well, according to him.
The borrowings of the KSSPL were merely for the purpose of managing the liquidity of the State and for ensuring that welfare pensions to over 60 lakh beneficiaries were not delayed due to cash management problems, Mr. Balagopal said.
”Most of these amounts are repaid during the course of the year. The (CAG) report also loses sight of the fact that it is because of the State’s wide social security net through the KSSPL that the State has been able to keep poverty down to below 1%, which is the lowest in the country (if we go by the reports of the NITI Aayog of the Government of India),” Mr. Balagopal said.
In its audit report for the year ended March 2020 also, the CAG had sharply criticised the State for off-budget borrowings by the KIIFB and the KSSPL.
