As much as Rs 10,000 crore raised with the help of Pravasi Chitty in KIIFB is earmarked to finance two new road projects.
The Kerala government’s Pravasi Chitty, a financial savings scheme for expats from the state, is estimated to net Rs 25,000-crore business this year, finance minister TM Thomas Isaac has said. The margins are likely to boost the inflows into the Kerala Infrastructure and Investment Fund Board (KIIFB), the state government’s extra-budgetary fundraising kitty.
“Although Pravasi Chitty is meant to harness the savings of over two million expats from Kerala spread out worldwide, currently it has been introduced only in the UAE. Soon, it will be extended to cover the state’s diaspora in GCC countries and later to countries like UK too,” Isaac said.
As much as `10,000 crore raised with the help of Pravasi Chitty in KIIFB is earmarked to finance two new road projects, Hill Highway and Coastal Highway. The state government-run NBFC Kerala State Financial Enterprises (KSFE), which recently launched the Pravasi Chitty, has similar chit schemes responsible for nearly half of its `50,000-crore annual business.
“A portion of the turnover of the Pravasi Chitty would be invested in the bonds of KIIFB, in the name of KSFE. Earlier, the Kerala government had hiked vehicle taxes by 10% and clamped cess on petro-products. This extra income is used as the government’s guarantee to return the investments in Pravasi Chitty,” PV Unnikrishnan, director, KSFE, told FE.
For the NRI investor, Pravasi Chitty offers 8-18% returns, free life insurance, insurance for partial or full disability and an optional pension benefit. Eyeing Gulf subscribers, it is also designed Shariat-compliant, interest-free, fully digital and easy to operate through a smartphone, he said.
Debt-ridden and revenue-squeezed, the Kerala government had no option last year, but to design an extra-budgetary financial instrument as Pravasi Chitty to raise funds for infrastructure building.
Following the devastating floods in August 2018, the thrust on leveraging its diaspora savings had become crucial, as never before.