Kerala assembly polls: With 60,000-crore projects, LDF hard sells development

KOCHI: It is difficult to ignore the LDF government’s blitzkrieg of its developmental narratives and welfarism. But, are these just tall stories that are unfounded? Or will the LDF be able to actually deliver what they promise if they get a successive second term in office?
In his budget speech, finance minister T M Thomas Isaac had quantified the achievements of his government over the last five years.The LDF government had disbursed Rs 32,034 crore as pensions, against Rs 9,011 crore of the UDF government.
Apart from pension, LDF is banking on food security to cajole the lower-middle class and poor households. While the UDF spent Rs 5,242 crore on public distribution system, LDF has spent Rs 10,697 crore till the last budget.
However, LDF is betting big on the developmental agenda it had pushed through the last five years and are promising to deliver the same if voted to power again. And figures are in their favour during 2011-16 the UDF government renovated 7,780km of roads while the LDF government modernized 11,580km roads during its tenure, with a further 4,530km yet to be completed at the time of the budget.
Much of the fund-raising infrastructure and industrial infrastructure development was carried out through Kerala Infrastructure Investment Fund Board (KIIFB). As of February 2021, there were 816 KIIFB-approved projects with a cumulative project cost of Rs 40,401 crore. The maximum number of projects were in PWD (377), sports and youth affairs (37), general education (116), higher education (46), water resources (85) and power (15). Of these, the big tickets were in PWD (Rs 17,375 cr), general education (Rs 2,428 cr), health (Rs 3,128 cr), IT (Rs 1,413 cr), power (Rs 5,200 cr), water resources (Rs 5,178 cr). With three more land acquisition projects added to these, the total outlay for development projects touches Rs 60,401 crore.
Now, the question is how far these grand plans have succeeded? Till the end of September 2019, KIIFB had raised Rs 3,755 crore from various sources, including Rs 2,150 crore through masala bonds listed on the London Stock Exchange. Till the budget, KIIFB had completed projects worth Rs 7,000 crore and going forward, projects worth Rs 15,000 crore will be completed during FY22.
With KIIFB raising funds through extra-budgetary means of financial market support, will it be possible to continue with the current momentum? “The LDF government has created a ‘fiscal illusion’ where the state is a borrowing and spending entity, rather than a taxing and spending entity,” said Jose Sebastian, former senior faculty, Gulati Institute of Finance and Taxation (GIFT).
K K Krishnakumar, senior fellow, Centre for Socio-Economic and Environmental Studies (CSES), said that the KIIFB model is an innovative one which brought the state out of the vicious cycle of declining capital expenditure and the low repayment capacity. “However, if the KIIFB model has to be sustainable, there should be a tremendous effort on the financial management side as well as in retaining the credit rating of the state and that will be the job left to the next government,” he added.