Kerala govt plans to rope in Shariah-based fund for roads

The Left Front government in Kerala plans to depend heavily on Shariah-based fund from Islamic countries for developing the road network in the state. The budget for 2011-12, presented by Finance Minister Thomas Issac in the Assembly on Thursday, unveiled road development project of Rs 40,000 crore for the next 10 years. The state government has set aside Rs 1,000 crore for the scheme.

In a state where the idea of BOT roads is yet to go down well with the political parties and agitating groups, the government plans to raise a major chunk of the money from the Shariah-based Islamic non-banking financial entity, Al Barakh Financial Services Limited, which has influential NRIs as major stakeholders. The Congress-led UDF has not raised any objection, as their leaders have close links with the powerful NRIs from the state.

Issac said the State Road Fund Board (SRFB), and the Kerala Road and the Bridges Development Corporation (KRBC) would be allowed to borrow from the open market. To achieve their credit rating, revenue from the motor vehicles' tax would be deposited in an escrow account. Simultaneously, these organisations would mobilise resources from advertisements and land development.

"Once the interest-free financing institution, Al Barakh, comes into operation, the state government would permit the SRDB and KRBC to levy a fixed percentage as service charges for their construction work. A share of the profit will be given to Al Barakh," said Issac.

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