Masala bond listing part of Keynesian economics: Thomas Isaac

Oppn says move to borrow money at 9.7 pc interest a liability to govt; minister says LSE listing best way to find funds for KIIFB projects

Published: 29th May 2019 04:38 AM  |   Last Updated: 29th May 2019 04:38 AM   |  A+A-

By Express News Service

THIRUVANANTHAPURAM: The Assembly on Tuesday witnessed a heated debate over the listing of masala bond in the London Stock Exchange, with the ruling front and Opposition taking pot shots at each other.

While the Opposition expressed dismay over the drifting of a Communist government towards neo-liberal economic policies, Finance Minister Thomas Isaac shot back saying the listing of the bond was part of Keynesian economics and not neo-liberal economic policies.

KS Sabarinathan MLA, who moved the adjourned motion demanding a discussion on the listing of the bond, termed the Kerala Infrastructure Investment Fund Board (KIIFB) a kitchen cabinet. He said a coterie has taken the crucial decision on the listing of the bond even without holding a formal discussion in the Cabinet. Mossad is far better than this ‘kitchen cabinet’ as it keeps all its activities under wraps, he said.

Even as various global lending institutions are ready to provide loans at an interest ranging between 1.5-3 per cent, the state government decision to borrow money at an interest rate of 9.723 per cent is a big liability to the government, he said, adding it will ring the death knell of Communism.

Various institutions including the NHAI have listed bonds in the London Stock Exchange at an interest rate ranging from 4.85 per cent to 7.37 per cent. The rating of KIIFB is BB, below the rating of the Central Government. As part of the listing of the masala bond, an industrial park with an outlay of Rs 12,710 crore has been listed under KIIFB, said Sabarinathan. He said buying of bonds by Canadian pension fund CDPQ, which has significant stakes in the Canadian SNC Lavalin company that faces corruption charges, raises eyebrows.

Replying to the motion, Isaac said listing the masala bond is the best way before the government to find funds for the developmental works listed in KIIFB. “It is true KIIFB has only BB rating. It is based on the ranking of the institutions, track records and considering other parameters, the interest rate is fixed. In the current circumstances, it is the best option before the government to collect the fund required for development works,” he said.

Lavalin charge
On charges related to SNC Lavalin, Isaac said any company is free to invest in the bonds and all such will contact the state government. In a specific reply to Sabarinathan, Isaac said everybody knows who first introduced Lavalin in Kerala and signed an MoU with the firm.

No vote
Opposition leader Ramesh Chennithala, MLAs Anoop Jacob, M K Muneer, A N Shamseer, Mullakkara Ratnakaran and M Swaraj spoke. Post discussion, the Opposition did not press for voting on the motion.

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