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Kerala chief minister Pinarayi Vijayan. Photo: Ramesh Pathania/Mint
Kerala chief minister Pinarayi Vijayan. Photo: Ramesh Pathania/Mint

Kerala looks to raise Rs10,000 crore from its gulf diaspora

Kerala CM Pinarayi Vijayan on Monday launched a chit fund scheme that aims to raise Rs10,000 crore in two years from Keralites living in the Gulf nations

Bengaluru: Ironic as it may be seem, the communists in Kerala want to mint money by working the market. Kerala chief minister Pinarayi Vijayan on Monday launched a chit fund scheme that aims to raise Rs10,000 crore in two years from its non-resident Keralites living in the Gulf countries, the latest in a series of unconventional ways the ruling communists are now trying to make big money to finance their hallmark policy initiatives such as building wide roads, better public schools, and hospitals.

Kerala State Financial Enterprises, a profitable state-owned non-banking financial company, which has been running chits within Kerala for more than five decades, will run the new scheme overseas. The money made by broadening its base to Keralites working in the Gulf, who form about 10% of Kerala’s 30 million population and send home more than Rs1 trillion every year, will in turn trickle in for capital expenditure back home.

One instalment of every chit will be locked in and kept as a float for Kerala Infrastructure Investment Fund Board (KIIFB), a recently revamped state-owned company that will act like escrow mechanism to mobilize funds for large infrastructure projects. The chit scheme is sweetened with an insurance cover, pension offering, among others, possibly keeping in mind that the receding rate of Keralite migration to the Gulf after the Arab economy got fractured post the 2014 oil crisis.

KIIFB is working its way to raise money through domestic bonds as well as rupee-denominated bonds issued overseas called Masala bonds. For issuing the second, a novelty in state financing in India, the government has appointed Axis Bank and Standard Chartered Bank as the lead managers and has engaged international credit rating agencies S&P and Fitch for rating the issue, according to chief executive officer K.M. Abraham.

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