Kerala Current Affairs
Kerala Infrastructure Investment Fund Board to issue masala bonds worth Rs 5,000 crore for development works
Kerala Infrastructure Investment Fund Board (KIIFB) is going to issue masala bonds worth Rs. 5,000 crore to mobilise funds for various development works. KIIFB has appointed Standard & Poor’s and Fitch Ratings for rating the masala bonds issue. The bonds will be listed in London and Singapore stock exchanges. The funds will be raised in tranches over period of 10 years.
It is Kerala government owned financial institution. Its mandate is to mobilize funds for infrastructure development from outside state revenue. It is statutory body constituted by Kerala Infrastructure Investment Fund Act, 1999.
Masala bonds are rupee-denominated bonds through which Indian entities can raise money from foreign markets in rupee and not in foreign currency. Basically, it is debt instruments used by corporates to raise money from foreign investors in local currency. The issuance of rupee denominated bonds transfers risk associated with currency fluctuations to investors and not to the issuers. This is especially during depreciation of domestic currency and when borrowing is in foreign currency as company has to pay more while repaying its debt, or while servicing interest on such borrowings if the rupee weakened. From the issuer’s perspective, masala bonds provides cheaper borrowings compared to raising funds in India besides helps in diversifying its sources of fund-raising. Besides, it also helps in internationalization of the rupee and in expansion of Indian bond markets. Its issuance in long term can help to check slide of rupee and also reduce current account deficit over time.
GST Council, the highest decision-making body of Goods and Services Tax (GST) regime has decided to set up seven-member Group of Ministers (GoM) to suggest on cess demand for Kerala flood rehabilitation. It was decided in 30th meeting of the GST Council held in New Delhi. The GoM discussed proposal from Kerala to levy Calamity Tax, a special tax or cess to raise additional resources aimed at meeting cost of reconstruction in Kerala in the aftermath of floods.
Severe flooding in month of August 2018 had severely affected Kerala due to unusual high rainfall during the monsoon season. It was the worst flooding in Kerala in nearly century after great flood of 99 that happened in 1924. It had directly affected one-sixth of total population of Kerala. All 14 districts of the state were placed on red alert. Central Government had declared it “calamity of a severe nature” or Level 3 Calamity. Due to excessive rainfall, 35 out of total 54 dams within state were opened for the first time in history. All five overflow gates of the Idukki Dam were opened at the same time, for the first time in 26 years. Heavy rains also had triggered severe landslides in Wayanad and Idukki districts and had left the hilly districts isolated. It is estimated that loss and damage due to massive flood, , is much more than 2018-19 annual plan outlay of state which stood at Rs 37,247.99 crore.