VD Satheesan for partial privatisation of loss-making PSUs

THIRUVANANTHAPURAM: In the wake of the ongoing financial strain caused by numerous loss-making public sector undertakings (PSUs) in Kerala, Opposition Leader VD Satheesan has urged the government to seriously consider partial privatisation of selected PSUs.

He said if all options to improve these companies are run out, the government needs to explore other possibilities including selling off a portion of ownership in selected loss-making companies to experienced private entities that can turn around these PSUs.

Recently, businessbenchmark.news released a story quoting the Comptroller & Auditor General of India (CAG), which urged the Kerala state government to shut down public sector undertakings (PSUs) that do not have sustainable business models.

Strained state finances

The CAG highlighted the ongoing burden these loss-making PSUs impose on the state’s already strained finances and recommended decisive action to halt the financial drain they cause on the state exchequer.

Talking to businessbenchmark.news, Satheesan stressed that whatever steps the government initiates to bail out these financially struggling PSUs, it should ensure the employees do not suffer.

“There should be clear-cut plans to rehabilitate the affected employees in the event of a privatisation move,” he stated adding that the state can’t keep on funding these PSUs endlessly.

Will improve efficiency

A chartered accountant specialising in reviving ailing companies said privatisation not only turns entities commercially viable, more importantly, the government upon offloading a part of its ownership in such companies, will stand to earn substantial funds from the sale of shares.

Losses, a legacy

Out of the 131 working PSUs, 55 PSUs earned profit of Rs654.99 crore as per their finalised accounts submitted till September 2022.

While 63 PSUs incurred a much larger losses to the tune of Rs4,065.38 crore, four PSUs have incurred no profit/loss, taking the effective combined losses to Rs3,410 crore for that year.

“I am not per se in favour of closing down or privatising the state-owned companies, but we can’t remain our eyes closed to these realities forever,” Satheesan added.

He reminded that the state finances are in a precarious condition, and it cannot go on subsidising these entities for long at the cost of public’s money.

However, the Opposition leader said the public utility services such as KSRTC, KSEBL, Kerala Water Authority (KWA) and the likes should not be ‘brought to the block’ at any cost.

 “They should be retained under the government itself irrespective of whether they make profit or not,” Satheesan was emphatic.

LDF stance

However, the LDF government has firmly reiterated its stance on PSUs.

In a recent conversation with this writer, P Rajeev, the Industries Minister, emphasised that it is the government’s clear and stated policy not to dilute its ownership in public sector undertakings (PSUs), regardless of the financial losses these companies may incur.

Investments

Not only that the majority of these PSUs have been rolling out losses year after year, more seriously, the government is required to keep investing in these companies its ‘precious funds’ in the form of loans and equity injections in order to keep them afloat.

As on March 31, 2022, the government of Kerala (GoK) has invested Rs20,439.04 crore in 131 PSUs as equity and long term loans.

Accumulated losses

Moreover, 75 working PSUs had heaped up an aggregate accumulated loss to the tune of Rs19,169.12 crore as per their latest finalised accounts.

Of the 75 PSUs, the net worth of 46 PSUs had been completely eroded by their accumulated losses, and the net worth was rendered negative Rs12,460.21 crore against equity investment of Rs6,081.18 crore.