State-level public sector enterprises (SLPEs) haven’t relented on their perennial assault on the exchequer. According to data reviewed by FE concerning such firms belonging to 19 states, their combined losses jumped 38.5% to Rs 42,000 crore in FY16. Worse, the year saw the grants/subsidies by these state governments increase by 26% to Rs 76,086 crore.
The picture would have looked even grimmer had the data from SLPEs from the two big states — Uttar Pradesh and Tamil Nadu — been included, official sources said. The SLPEs of the two states alone had reported Rs 31,600 crore loss in FY15; the figures for FY16 are yet to be compiled.
FE had reported earlier that the central public sector enterprises (CPSEs) enriched the central exchequer by Rs 44,000 crore dividend in FY16.
The SLPEs of Rajasthan bled the most in FY16 with Rs 12,374 crore losses, followed by Maharashtra at Rs 6,735 crore (see chart). States which gave the highest amounts as grants to these companies include Karnataka (Rs 12,756 crore) and Telengana (Rs 10,320 crore). The total grants/subsidies received by the SLPEs, most of which are providing infrastructure services, including power supply, road transportation and irrigation at far below remunerative prices, was 12% of their turnover in FY16.
Out of the 676 operating SLPEs of 19 states for which data was available, 323 earned modest profits in FY16 and as many as 233 incurred heavy losses, especially those in the power sector. The annual turnover of these SLPEs stood at Rs 6.34 lakh crore, 40% lower than the total financial investment of Rs 8.9 lakh crore in these firms. To give a perspective, the turnover of CPSEs in FY16 was Rs18.67 lakh crore, 58% more than investment in those companies. The ratio of SLPEs’ turnover to GSDP for the year was 7%, nearly half of that of the CPSEs’.
Top profit-making SLPEs include Maharashtra State Electricity Transmission Company (Rs 2,600 crore) and Telengana’s Singareni Collieries Company (Rs 1,066 crore). Huge losses were incurred by Maharashtra State Power Generation Company (Rs 8,742 crore), Telengana’s power distribution units TSSPDCL and TSNPDCL (Rs 3,712 crore), Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company (Rs 2,766 crore) and MP Pashchim Kshetra Vidyut Vitaran Company (Rs 1,207 crore).
The lacklustre performance of SLPEs, demand serious introspection by the state governments, said an official familiar with the affairs of these companies. Given the fiscal condition of the states, they can ill-afford to have such large numbers of loss making units. Like the Centre, the states would have to explore the possibility of listing some profitable PSUs to unlock their value while taking steps to shut-down non-viable businesses where state role has been taken over by private sector, the official added. Out of 676 these state-level units, only two are listed.
In FY16, the state governments’ gross fiscal deficit-GSDP ratio deteriorated to 3.6% from the budgeted estimates of 2.4%, due to their participation in the financial and operational restructuring of state power distribution companies. Under the Ujwal Discom Assurance Yojna, Rajasthan alone gave Rs 36,569 crore loan to its three power distribution companies.
Some SLPEs are big employers too. The 676 SLPSEs employed 10.48 lakh people in FY16. Maharashtra PSUs alone employed 2.18 lakh people, followed by Karnataka (1.93 lakh), Gujarat (1.12 lakh) and Rajasthan (1 lakh).