THIRUVANANTHAPURAM: Even as the CAG's audit report on KIIFB has kicked up a row, Kerala Finance Minister TM Thomas Isaac is confident that the assembly would reject the report. In an interview with TNIE, he says the CAG row will be a major electoral plank for LDF, and UDF will have to pay a heavy price if they don't speak up at least now.
Last week you raised an issue referring to the CAG's 'draft' report that termed KIIFB's borrowings unconstitutional. The controversy has taken a new turn as it is now revealed that it was not a draft report, but the final report.
I agree that there's a procedural issue involved. There's a ruling of the Speaker that the final report has to be placed in the assembly before putting it out in the public domain. At that moment, I was convinced in good faith that it was a draft report. But then this matter is too big a thing to be kept under cover. There is already a case before the High Court in which the petitioner is the leader of the Swadeshi Jagaran Manch and the counsel is a KPCC secretary. I accidentally came to know that efforts were made to ensure the listing of the case at the earliest and that CAG is one of the respondents. I defended the best interest of not the government, but the state. If there's something procedurally wrong, I'm willing to face the music.
Did you obtain clearances from the RBI and the Central government for issuing Masala Bonds in the LSE? If so, was it a one-time clearance?
The RBI gave its sanction and there was no need for a clearance from the Central government. The RBI's sanction was for the particular issue.
Do you fear that the RBI will deny permissions in future in the wake of the CAG's observations?
I don't know whether the RBI will change its stance. If they change their stance, they'll have to explain why.
What would be the culmination of this fight with the CAG?
We have no choice other than fighting till the bitter end. I hope we'll be able to mobilise the people and it would be reflected in the elections. This issue is going to be a major electoral plank for the Left front. The UDF will have to pay a heavy price if they don't speak up at least now. Secondly, we will now seriously consider exploring legal options.
I may even discuss the same with other states too. There's absolutely no doubt that the CAG report will be rejected by the assembly. Neither the assembly nor the PAC (Public Accounts Committee) will accept such a report. No clear-headed person is going to accept what the CAG has said. But then there's a court case going on. The court verdict is final and binding on us.
Even if the assembly rejects the CAG's report, will there be an investigation based on the report?
Yes, the Central government can investigate and they are welcome to do so.
The CAG has the right to prepare its final report without taking into account the audited party's explanations on the errors cited in the draft report. Then why do you criticise the CAG for its observation that KIIFB had violated constitutional provisions?
The draft report for 2018-19 had two paragraphs referring to KIIFB -- one which claimed that the KIIFB's borrowings were off-budget and the other related to the statement of accounts. These did not have any reference on constitutional validity. But the final report has four paragraphs in which the entire institution has been deemed illegal. Since it was not there in the draft, the state was denied its right to respond to that argument. The CAG has violated its own audit guidelines and did grievous wrong to the state. I accuse that it is politically motivated. During the eight audits on KIIFB since 1999, the CAG had never observed that the KIIFB borrowings were against the constitution. If KIIFB's borrowings are unconstitutional, so are the borrowings made by PSUs and various SPVs under the state and Central governments.
Is not the CAG correct in its observation that KIIFB was making off-budget borrowings?
No, because the money given by the government to KIIFB, a portion of the motor vehicle tax, is budgeted. Projects undertaken by KIIFB are not part of the budget but were stated in the budget speech.
On the CAG's finding that KIIFB's liabilities are the direct liabilities of the state government.
KIIFB makes a rigorous asset-liability matching before each sanction. It has an information system in which the assets and liabilities in any particular period in the future can be predicted. The assets consist of the payment by the government which too can be predicted. Also, 25 per cent of KIIFB projects are revenue earning.
Hence, the liabilities will be much lower than the assets. For example, the outgo from KIIFB so far is about Rs 5,000 crore while the government has already given over Rs 10,000 crore to it.