State governments-owned companies, a perennial drain on the exchequer, have plunged to new depths, even as their central-sector counterparts are raking in profits. A review of the balance sheets of 994 state PSUs by FE revealed that their combined annual losses increased 13% to a whopping Rs 74,724 crore in the financial year ended March 2016 (FY16), even as the cumulative investments in these firms from taxpayers’ money jumped 22% year-on-year to Rs 12.57 lakh crore.
The budget support to these under-performing firms in FY16, incidentally, stood at close to Rs 2 lakh crore, a huge 42% higher than the previous year’s outlay. Clearly, with accumulated losses to the tune of Rs 4.3 lakh crore, even if they miraculously turn around now, it will take several years for them to wipe out the humungous losses.
The aggregate turnover of these PSUs in 26 states in FY16 was 48% lower than the investments since inception. For perspective, the turnover of all 244 central public sector enterprises (CPSEs) in FY16 was Rs 18.67 lakh crore, 58% more than the total investments in them over the years.
Despite constant reminders by the Centre, most state governments are reluctant to restructure these assets — which obviously would necessitate closure of most of these companies and large-scale retrenchment.
At a time when the state budgets have come under strain again after a few years of fiscal consolidation, the UDAY scheme for discoms and farm loan waivers have increased the burden on state finances and many of them have already begun squeezing capex, and the constantly bleeding PSUs are adding to their woes.
Among the state PSUs, those in Uttar Pradesh bled the most in FY16 with losses of Rs 17,790 crore, followed by Tamil Nadu’s at Rs 14,873 crore and Rajasthan’s at Rs 12,347 crore. States which gave the highest amounts as budgetary support to these companies in FY16 include Rajasthan with a massive Rs 50,655 crore, an annual increase of 288%. Uttar Pradesh (Rs 19,794 crore), Tamil Nadu (Rs 18,416 crore) and Karnataka (Rs 12,756 crore) have also been very liberal in infusing fresh funds into these mostly sick units. The budget support received by these companies, most of which are providing infrastructure services such as power supply, road transportation and irrigation at far below remunerative prices, was 23.5% of their combined turnover in FY16.
Out of the 994 state PSUs for which data is available, 600 earned modest profits in FY16.
Among individual units, the highest losses were incurred by Maharashtra State Power Generation Company (Rs 8,742 crore), UP’s Dakshinanchal Vidyut Vitran Nigam (Rs 5,521 crore), Purvanchal Vidyut Vitran Nigam (Rs 4,094.62 crore) and Telengana’s power distribution units TSSPDCL and TSNPDCL (Rs 3,712 crore). Top profit-making state PSUs include Maharashtra State Electricity Transmission Company (Rs 2,600 crore) and Telengana’s Singareni Collieries Company (Rs 1,066 crore).