Thiruvananthapuram: Kerala Infrastructure Investment Fund Board (KIIFB) functioned as an independent empire, bypassing govt and finance department controls and imposing a huge financial burden on the state, chief minister V D Satheesan said on Thursday after the expert committee report on KIIFB was tabled in the assembly. The cabinet will decide on further action based on the report, he said.The committee, chaired by former IAS officer Sudha Pillai, with Tarun Bajaj, Shyam Srinivasan, Nilesh Vikamsey and H Subhalakshmi Narayanan as members, recommended that KIIFB stop fresh market borrowing, and that the state govt take over its outstanding debt and fund unfinished projects through the budget. It estimated additional costs of Rs 13,103 crore from KIIFB’s financing model, and identified financial commitments of Rs 70,415.54 crore up to 2041-42.KIIFB had sidelined the finance department, Satheesan said. A finance department decision against providing a govt guarantee was overturned at a meeting chaired by the then chief minister, violating the rules of business, he said. Only the cabinet could override the department. The report also flagged former KIIFB CEO K M Abraham simultaneously serving as an ex-officio govt secretary, calling it a case of dual positions.KIIFB’s outstanding borrowings stood at Rs 31,681.15 crore as on June 30, 2026, and Rs 25,932.55 crore had been deducted from the state’s borrowing space for its loans, the report found. Between 2021-22 and 2024-25, govt transfers to KIIFB amounted to 99.4% of its debt servicing, contributing virtually nothing to fresh infrastructure investment.KIIFB’s borrowing costs exceeded the state’s own market borrowing rates by 85 to 179 basis points in most comparisons, adding an estimated Rs 396 crore a year to the cost of its outstanding debt. The report put the excess cost of the masala bond, including interest and issue expenses, at Rs 181.73 crore. It also flagged KIIFB parking borrowed funds in lower-yielding deposits while paying higher interest on its loans.Satheesan also pointed to irregularities in consultancy payments and land acquisition. In Kannur, around 1,000 acres had been acquired but only 50 acres were in use, he said. He questioned why land was bought at several times the prevailing cost and why a notification was issued to acquire another 4,000 acres.Project allocation was concentrated in a few districts. Thiruvananthapuram, Kannur and Ernakulam accounted for 41.6% of approved infrastructure outlay, while Kannur alone accounted for 52.9% of the land acquisition pool.The report flagged Rs 203.72 crore in publicity and promotional expenditure in 2025-26 for a comprehensive audit, against Rs 21.16 crore recorded under the corresponding head. Citing concerns over vendor selection, procurement and supporting documentation, it recommended an audit. Satheesan alleged large-scale irregularities, saying funds raised through high-interest borrowings had been spent on publicity.KIIFB had 498 personnel against 40 sanctioned posts. The committee recommended rationalising the establishment, since KIIFB would no longer raise market funds or implement projects under the proposed restructuring.
