THIRUVANANTHAPURAM: The customary dispute between the central auditor and the Kerala government on off-budget borrowings (OBBs) like the KIIFB erupted this year too after the CAG tabled its report in the assembly. The CAG reiterated its stand that OBBs increased the liabilities of the government. This time, besides the KIIFB and Kerala Social Security Pension Limited (KSSPL), it also found fault with the Bill Discounting System (BDS) for contractors and listed it under the OBB liability.
BDS is a form of short-term borrowing resorted by the government to overcome paucity of funds. Under it, the government issues promissory notes to contractors who opt for BDS against their pending bills. Contractors can get prompt payment of bills by discounting it at their banks. The promissory notes pending settlement as on 31 March 2022 was Rs 1601.72 crore. As per the report, the government resorted to OBBs amounting to Rs 15,914.50 crore in 2021-22. OBBs through KIIFB was Rs 7,762.78 crore, through KSSPL was Rs 6,550 crore and through BDS was Rs 1,601.72 crore. They led to an understatement of government liabilities in the state budget by Rs 25,874.39 crore, the report said.
The report said OBBs will have an impact of increasing the liabilities of the state government, leading to a debt trap. As these borrowings are not disclosed in the budget, the legislature is unaware of creation of such liabilities, it said.
Finance Minister K N Balagopal, said the CAG’s observations on KIIFB were earlier rejected by the Public Accounts Committee and the assembly. “The borrowings of KIIFB are on the basis of government guarantees and are, therefore, not direct liabilities of the state. They are only contingent liabilities particularly since KIIFB also funds remunerative projects and generates its own income,” he said.
Borrowings by KSSPL are only for liquidity management and to ensure welfare pensions to over 60 lakh beneficiaries in the state are not delayed due to any cash management issues.