Loss-making PSUs likely to face closure | india | Hindustan Times
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Loss-making PSUs likely to face closure

india Updated: Feb 06, 2007 14:21 IST

THE STATE Government is considering restructuring or even closing down unviable State-owned boards and corporations. According to sources, as a part of ongoing reforms, the State Government proposes to strengthen PSUs in which the government ownership is required to meet public purpose, and restructure and divest the remaining enterprises to achieve greater efficiency, increase market discipline and have wider dispersion of ownership.

State Planning Board vice-chairman Sompal Shastri has written a letter to Principal Secretary, Public Enterprises Department, O P Rawat, in this regard. Shastri is learnt to have requested Rawat to identify viable and unviable undertakings.  

Rawat admitted that the State Government is contemplating to deal with this issue with all options open. “The issue is in preliminary stage. First we would look about viability of these undertakings then only take any decision”, he added.
Rawat further said that process of winding up six PSUs is in the final stages. After completing this exercise, a decision would be taken about the remaining undertakings, he added.

For undertaking this exercise, a high-level committee is likely to be constituted at the Government level. The Condition of PSUs in Madhya Pradesh is pathetic because, with the exception of a dozen of PSUs, all other are running in losses, which are increasing with the each passing year.

Sources in Mantralaya said that the Union Finance Ministry has also asked the State Government to draw up a time-bound programme for closing or disinvesting its stake in “almost all” loss-making state-level public sector enterprises (PSEs).

In a recent missive to the states, the Union Expenditure Department has said the large amount of unproductive capital locked with PSEs was a major financial drain.

The department said the Twelfth Finance Commission-mandated restructuring of state finances hinged a lot on winding up these loss-making PSEs.

The Union Government has asked all States that by the end of the TFC (Tenth Finance Commission) award period (2005-10), they should be left with only a few viable PSEs”, a senior official revealed. 

The Centre has also asked states to rework pricing of services such as irrigation, water charges and bus fare, after computing the subsidy element.