8. The Masala Bond That Stirred Debate
Earlier this month, the Kerala Infrastructure Funding Fund Board raised Rs 2,150 crore by way of a masala bond difficulty. This difficulty of rupee-denominated bonds within the abroad markets was the primary time a state authorities entity borrowed offshore, stated a press release from Cyril Amarchand Mangaldas, which suggested the entity on the problem of those securities.
Whereas KIIFB had secured approval from the Reserve Financial institution of India earlier than continuing with the bond difficulty, it’s fund elevating has raised questions. Amongst them:
- If a state will not be permitted to borrow abroad then ought to an entity assured by the state be allowed to make use of that route?
- Ought to this route grow to be fashionable, will it result in under-reporting of fiscal deficit by states as massive infrastructure expenditure will get pushed on to quasi-government entities?
Listed below are the solutions to those two burning questions.