Why Kerala Chief Minister Pinarayi Vijayan is visiting Europe and London: All what a UK Malayalee should know

LONDON May 8: Kerala Chief Minister Pinarayi Vijayan will fly to Europe for a two-week tour starting May 8, 2019 (today). During this Europe and London trip he will be participating in various programmes aimed at garnering financial gains to the state and also focusing on infrastructure and development.

He will be in London only for one day which is May 17 for the listing of the masala bond on the London Stock Exchange and then the launch of Pravasi Chit Fund in the afternoon. The same evening he will fly to Paris.

The chief minister’s European programmes will include attending the United Nations (UN) world reconstruction conference in Geneva, Switzerland. The conference is a global forum providing a platform to collect, assess, and share experiences in disaster recovery and reconstruction and take forward the policy dialogue.

The chief minister would share at the conference the devastation caused by the floods in August last and explain in detail the reconstruction plan, an official press release from Kerala government said.

The chief minister and his team would visit ‘Room for River’ project of Netherlands which is a model to rebuild a flood-hit state. The release said Chief Minister would also meet French economist Thomas Picketty in Paris on May 16.

The chief minister would attend a meeting with Swiss investors to attract investment to Kerala. During his visit to Switzerland, the chief minister would hold a meeting with United Nations Development Programme (UNDP) crisis bureau directorAsako Okai.

On May 17 the chief minister will attend the listing on the London Stock Exchange a masala bond from Kerala Infrastructure Investment Fund Board (KIIFB), the only state-government body from India to issue the rupee-denominated offshore bond. KIIFB plans to raise Rs 5,000 crore through masala bonds to fund large and critical infrastructure projects in Kerala.

KIIFB’s masala bond was the brainchild of Kerala finance minister Thomas Isaac and KIIFB chief and former Securities and Exchange Board of India director K.M. Abraham. The board has raised ₹2,150 crore through masala bonds.

Masala bonds are bonds issued outside India but denominated in Indian Rupees, rather than the local currency. Masala is an Indian word and it means spices. The term was used by the International Finance Corporation (IFC) to evoke the culture and cuisine of India.

Unlike dollar bonds, where the borrower takes the currency risk, masala bond makes the investors bear the risk. The first Masala bond was issued by the World Bank- backed IFC in November 2014 when it raised 1,000 crore bond to fund infrastructure projects in India.

Later in August 2015 International Financial Cooperation for the first time issued green masala bonds and raised Rupees 3.15 Billion to be used for private sector investments that address climate change in India.

On May 17, 2019 afternoon the KSFE Pravasi Chit fund will be launched at 2pm at The Montcalm Royal London House Hotel in Liverpool Street in London.

Pinarayi Vijayan has invited Jeremy Corbyn, the veteran Left wing leader of the UK opposition Labour Party, to launch the state’s offshore chit fund in Europe. The chit funds are the latest in a series of measures taken by Kerala government to attract funds, working the market for capital expenditure back home.

Vijayan launched the pilot phase of the chit fund scheme in June 2018 in the United Arab Emirates, a favourite destination of non- resident Malayalees, to raise ₹10,000 crore in two years.

The money is meant to finance their hallmark policy initiatives such as building wide roads and establishing better public schools, and hospitals, which is a priority as the state suffered one of its worst floods in 2018.

The state got 125,000 leads for the fund within a fortnight of the launch. This year, Isaac said, the state wants to raise ₹25,000 crore by expanding the scheme to other markets.

The scheme is primarily aimed at Kerala expatriates, who form almost 10% of the state’s 30 million population and send home more than ₹1 trillion every year. At 8-18% return offerings, the chits are also sweetened with life-term insurance cover, pension, and other benefits.

The 2018 Kerala flood, which ravaged the state and claimed 483 lives, was among the major disasters reported globally in the last year, including the California wildfire and the floods in Japan. The Post Disaster Needs Assessment (PDNA) report prepared by a UN team said Kerala would need Rs 31,000 crore for rebuilding.