Thiruvananthapuram: The controversial CAG report, passing serious strictures against the Kerala government for its market borrowings on behalf of its infrastructure development finance company KIIFB was on Monday placed in the assembly.
The report notes that the KIIFBI borrowings would become a liability for the state government and asserts that the masala bond issued by the company to raise funds was unconstitutional as it amounted to encroaching upon the jurisdiction of the Union government.
The state government took the unprecedented step of presenting a note by finance minister Thomas Isaac on the CAG remarks, which drew loud protests from the opposition benches, who alleged that it amounted to a violation of the rules of procedure.
The government, however, argued that it had secured permission from the governor to move such and explanation along with the CAG report.
The CAG report pointed out that KIIFB did not have its own financial resources, which meant that the borrowings would devolve on the state government. It would thus become a direct liability.
The report made the serious allegation that the Kerala government has violated the seventh schedule of the Constitution, which conferred the right to effect foreign borrowings exclusively on the Union government. This makes the state government’s course of action a breach of the constitutional provisions.
The report further pointed out that the RBI permission that the state government has claimed in support of the market borrowing could be challenged in future.
The state government and the ruling CPI-M had gone on the offensive against the findings of the CAG report even before it was presented in the house, which is supposed to have complete privilege over the matter.
The finance minister had even addressed press conferences refuting CAG’ contentions, and claiming that the findings were part of a deliberate attempt to subvert the state’ development initiative. The state government considers KIIFB as a great success and cites infrastructure projects undertaken with finance from the company worth several thousands of crores of rupees.
The finance minister’s action, in fact, attracted breach of privilege allegations against him from opposition members and the motion moved in this regard is pending final decision before the Speaker.