The opposition UDF on Wednesday backed the CAG report, which criticised the state- owned KIIFB's external borrowings through "Masala Bonds", in the Kerala Assembly and alleged that Finance Minister T M Thomas Isaac was lying and misleading the House. However, the members of the ruling LDF defended the Finance Minister and Kerala Infrastructure Investment Fund Board (KIIFB) strongly, saying the CAG report was a 'conspiracy' against the Left government in the state.
The Assembly witnessed heated arguments between the treasury and opposition benches during a two-hour-long discussion on the adjournment motion, moved by the latter. When Congress's V D Satheesan moved notice for an adjournment motion over the CAG report, tabled in the House on Monday, Speaker P Sreeramakrishnan granted permission for the discussion based on the request of Isaac.
Unleashing a scathing attack against Isaac, the opposition said the minister's argument that the CAG had criticised the KIIFB was wrong and the agency was empowered to conduct constitutional audit. They also alleged that the KIIFB had violated the Article 293 of the Constitution.
"As per the Article 293, KIIFB could not borrow from abroad. The board had taken loan from abroad violating the constitutional norms," Satheesan alleged. Though CAG had given the minutes of the exit meeting, the Finance Minister said the government had not received it, he said adding that Isaac 'misled' the Governor and the Assembly in this regard.
However, James Mathew of (CPI-M) sought to know why the Centre was not taking any action against the state government if the KIIFB borrowing was unconstitutional. "If it is unconstitutional, wont the Centre dissolve the state government?" he asked during the discussion.
M Swaraj of (CPI-M) also strongly defended the finance minister during the discussion. In the recent report, the CAG had said that the off- budget borrowings through KIIFB, a state owned institution which mobilises funds for infrastructure development from outside the state revenue, were not in accordance with Article 293(1) of the Constitution of India and "bypasses the limits set on Government borrowings".
"These borrowings are not taken into the disclosure statements in the budget documents or in the accounts and hence such borrowings do not have legislative approval," it stated. The state's borrowings are governed by Article 293(1) of the Constitution, the guiding principle of which is that the government was free to borrow money within the territory of India upon security of the Consolidated Fund of the state and the limits on such borrowings can be regulated under Article 293 (3) of the Constitution, the audit report said.