Orissa’s PSE Reform Spirits On A High

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Bhubaneswar: : The failure of the public sector enterprises (PSEs) reform programme does not seem to have dampened the Orissa government’s spirits. The state government has come out with a new strategy to revamp and restructure the PSEs, most of which have now become a liability on the government.

The reforms programme, based on recommendations of the Basanta Biswal Committee, in fact, made little progress as private investors had shown limited interest. Problems of over-employment, obsolete plant and machinery, trade union litigation, unclear land title, bankruptcy and huge liabilities shied away investors. Moreover, the absence of a clear cut privatisation policy was a stumbling block on the path of reforms.

However, the benefits that accrued from the little reforms that were carried out between 1993 and 2001 have emboldened the government. The sale of Talcher Thermal Power Station to National Thermal Power Corporation, Orissa Mining Corporation-owned Brahmanipal Charge Chrome plant to the Tatas, and the disinvestment of 49 per cent stake in Orissa Power Generation Corporation in favour of US utility major AES Corporation have become examples for other states going in for PSE reforms.

The situation with regard to PSEs, meanwhile, has changed in many a respect. Out of the 68 government companies and statutory corporations, 30 are now working. And, out of the 34 non-working companies, nine are under liquidation, 23 are under closure and two have been merged.

What, however, is a matter of concern is that these companies have become a burden on the government, which is facing a serious financial crisis. It has infused Rs 9,795 crore in terms of equity and loan in these entities. But, shockingly, the total cumulative loss suffered by these enterprises has touched Rs 1,642.34 crore. What is worrying is that if the loss-making companies continue their operation and accumulate losses at the same rate, by the end of 2004-05 it is feared that the entire capital would be wiped out. Realising that unless an expeditious approach is needed, the condition of the PSEs will deteriorate, the Orissa government in April 2002 adopted a new policy approach to reform. “We have chalked out a medium- term policy for PSE reforms”, said state public enterprises department secretary, Jugal Kishore Mohapatra.