The Kerala Assembly Tuesday witnessed heated exchange of words between Finance Minister T M Thomas Isaac and members of the opposition Congress-led UDF over the masala bonds sold by the Kerala Infrastructure Investment Fund Board (KIIFB).
While the opposition alleged lack of transparency and clarity in the issue of the bonds and its high interest rate would push the state into a debt trap, Isaac rejected the charge and said it would help accelerate the state's infrastructure development.
The Congress-UDF also urged the Left government to table in the House all records pertaining to the sale of masala bonds.
A state government agency, KIIFB, had recently raised Rs 2,150 crore through its debut masala bond issue as part of its plan to mobilise Rs 50,000 crore to fund large and critical infrastructure projects in the southern state.
Chief Minister Pinarayi Vijayan had rung the opening bell at the London Stock Exchange (LSE) earlier this month to mark the listing of the masala bonds sold by KIIFB.
Congress legislator K S Sabarinathan, who moved an adjournment motion over the issue, said the interest rate of KIIFB's masala bonds was 9.72 per cent, which was the highest of 44 such bonds being listed at the LSE in the last two years.
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"Kerala will have to give Rs 210 crore as interest in one year. Not just this exorbitant interest rate, the projects designed by the KIIFB in this regard are also mysterious," he said.
He questioned the mentioning of a Rs 12,240 crore worth Kannur Industrial park project in the documents of KIIFB and said the Assembly and the opposition were unaware about such a mammoth initiative.
Sabarinathan also asked the government to explain how the Canadian firm, CDPQ, which holds nearly 20 per cent share of the controversial company SNC Lavalin, had bought the lion's share of the masala bonds.
He was apparently referring to a case related to the alleged irregularities in awarding contract for renovation of three hydro-electric projects in the state to Lavalin when the present chief minister, Vijayan was the power minister in 1998.
Slamming the Left government, Leader of the Opposition Ramesh Chennithala wanted to know whether the cabinet and the LDF were aware the loan was taken on such a high rate of interest.
"We are not against accepting investment. There should be transparency... But, the government's actions regarding the issuing of the masala bond were mysterious," he said asking why the government had not held any prior discussion in the House regarding this.
Rejecting the opposition charges, Isaac said the bonds were issued following all the prescribed guidelines of Reserve Bank.
"I have never claimed that the interest rate of 9.72 per cent is low. When we borrow from the market, we can avail at this rate only. When the state's infrastructure is developed using this money, we can attract investments," he said.
Stating there was no need for any anxiety over the repayment of the loan, the minister said the petrol cess and upto 50 per cent of motor vehicle tax would be given as grant to KIIFB, which would be used for the purpose.
He also expressed confidence that the loan could be repaid completely by 2030 and said all the documents regarding the bond issue were open for the opposition to verify.
Indian Rupee denominated overseas bonds are popularly known as masala bonds.
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