The political row triggered over the masala bonds worth $220 billion floated by the Kerala Infrastructure Investment Fund Board (KIIFB) in the run up to the Lok Sabha election is feared to seriously erode the State’s credibility and deeply impact its future resource mobilisation initiatives in the international debt market.
The bonds were floated after a protracted and thorough inspection, verification and evaluation of the State’s fiscal health and resilience of the KIIFB mechanism to weather crises by international agencies. In that context, the political innuendos targeted against the process are feared to dent its image and also have a debilitating impact on similar attempts in the offing.
According to Finance Department sources, the procedures followed by the board were institutionalised by the Reserve Bank of India (RBI) and also the Central government. Neither the State government nor the KIIFB could evade any of the procedures laid by the apex bank and it was passed through a due vetting process.
Such controversies are likely to scare away prospective investors and some others may turn sceptic too. This would thwart resource mopping efforts of future governments too, sources said,
The company in question, Caisse de depot et placement du Quebec (CDPQ), was founded on the basis of an Act passed by the National Assembly of Quebec in 1965. The company that has major investments in infrastructure development projects, also manages several public pension plans and insurance programmes too.
KIIFB Chief Executive K.M. Abraham told The Hindu that the entire procedures were executed in a transparent manner, strictly within the tenets of law and apprehensions raised about the company were unfounded. “Care has to be taken to insulate such endeavours getting mired in controversies at it will impact our further resource mobilisation programmes for infrastructure development,” he said.
Kerala and KIIFB had earned the unique distinction of accessing the international market and the prime resources earned were to be channelised for funding a clutch of projects approved by the board. The fund generated was being described as one of the major foreign investments that the State had got during the past four decades and may even turn as a precursor for luring more potential investors to the State. This was imperative for the State reeling under acute resource crunch, sources said.