How adverse KIIFB report questions Kerala's infra model under Pinarayi Vijayan

A panel's findings on the functioning of the Kerala Infrastructure Investment Fund Board threaten to turn fresh political heat on the CPI(M) and former CM VijayanEven as the Congress-led coalition government in Kerala plans to restructure the Kerala Infrastructure Investment Fund Board (KIIFB), alleged irregularities in the entity during the previous Left Democratic Front (LDF) regime threaten to turn fresh political heat on the CPI(M) and former chief minister Pinarayi Vijayan. After taking office this year, the V.D. Satheesan-led UDF (United Democratic Front) government initiated a review of KIIFB’s functioning and funds utilisation through a five-member panel chaired by Sudha Pillai, retired member secretary of the erstwhile Planning Commission of India. The panel’s members were banking expert Shyam Srinivasan, former Union revenue secretary Tarun Bajaj, chartered accountant Nilesh Vikamsey and former audit board director in the Comptroller and Auditor General of India H. Subhalakshmi Narayanan.The panel, in its 96-page report submitted to the chief minister on October 13, has listed various alleged lapses at the organisational and governmental levels in the operations of KIIFB, which is the principal channel facilitating funding of critical and large public infrastructure projects in Kerala.The report identified that KIIFB’s borrowings had weakened the state’s fiscal management. “Kerala will need about Rs 70,415.54 crore in the coming years to pay off KIIFB’s debt and complete the pending projects, excluding land acquisition,” the report stated. As on June 30, 2026, the KIIFB’s outstanding borrowings stood at Rs 31,681.15 crore. This isn’t the first time KIIFB has come under the political scanner. On earlier occasions, various members of the legislative assembly have demanded greater transparency and accountability in its functioning and a more diligent approach while selecting projects for execution.The panel’s report has flagged major flaws in borrowings as well as alleged delay in completion of projects sanctioned, deviations from business rules of the government and mismanagement of resources. Besides, the report noted, KIIFB appointed 498 persons as against only 40 posts sanctioned, and fixed their remunerations without approval from the state finance department.The report also found severe imbalance in the distribution of funds by KIIFB to various government departments. For instance, the public works department (PWD) alone accounted for 52.6 per cent of approved infrastructure funds. Water resources and health and family welfare together received 19.6 per cent of the infrastructure funds. Twenty-six other departments received a paltry share.Incidentally, P.A. Mohammad Riyas, the son-in-law of Vijayan, was the PWD minister in the second term of the LDF government (2021-26). Current chief secretary Biswanath Sinha, as additional chief secretary (finance) during the period, had objected to the KIIFB’s borrowings on grounds that it would adversely affect Kerala’s borrowing limit and inflict a huge interest burden.Sinha had made the arguments during a meeting chaired by Vijayan in June 2023. Vijayan, as chief minister, however, overruled the objections. Coincidentally, Sinha was transferred to the home department a week later. Similarly, then finance minister K.N. Balagopal had objected to the government providing additional guarantee for KIIFB’s borrowings.Apart from the procedural irregularities or violations of business rules, alleged land irregularities involving KIIFB have come up. In October 2018, during the first term of the Vijayan government, the KIIFB board approved the acquiring of 5,366 acres of land in the districts of Kannur (4,896 acres) and Palakkad (470 acres) at an average price of Rs 2.49 crore per acre. For the acquisition, a huge loan was processed through the Housing and Urban Development Corporation (HUDCO) at an interest rate of 9 per cent.Manu Thomas, former Kannur district committee member of the CPI(M) and former district president of he Democratic Youth Federation of India (DYFI), alleges a scam in the land affair. “The land acquisition in Kannur provided senior CPI(M) leaders and their family members an opportunity to make profit from real estate business. Their cronies benefited too. Most of the land acquired for projects were barren hilly slopes where construction was not possible. In the name of development, the CPI(M) engineered corruption,” alleged Thomas in a conversation with INDIA TODAY.The CPI(M) has refuted Thomas’s accusations, pointing to his exit from the party in 2024.Vijayan and former finance minister Dr Thomas Isaac defended the KIIFB’s decision to acquire land for infrastructure projects. “Why the hue and cry over Kannur-based projects. Is Kannur not a part of Kerala?” countered Vijayan.Isaac claimed KIIFB had ensured speedy development of Kerala despite the BJP-led central government allegedly throttling the state on funds. “In the past eight years, KIIFB ensured development worth over Rs 2 lakh crore,” Isaac told INDIA TODAY.Even as the Satheesan government is scrutinising the recommendations of the Sudha Pillai committee report, divisions have emerged within the ruling Congress and its coalition partners over scrapping of KIIFB since this could stall many ongoing projects.Steering clear of the politics, former chief secretary Jiji Thomson offered a wider perspective on the KIIFB fiasco report. “A fair reading of the Sudha Pillai committee report suggests it has successfully documented significant deficiencies in governance, oversight and procedural compliance. However, critics may argue that it places insufficient emphasis on KIIFB's developmental achievements and does not fully distinguish between administrative innovation, poor judgment and actual misconduct,” he said.“The real debate must focus on whether the irregularities represented necessary flexibility in pursuit of development or were unacceptable departures from the principles of public accountability,” Thomson told INDIA TODAY.Subscribe to India Today Magazine- Ends