E-Paper
State-run companies in Punjab bleeding, losses now ₹18k cr
The proportion of loss-making SPSEs in Punjab is the second highest among the non-north eastern and hilly (non-NEH) states in the country, just behind Telangana, where 11 of 18 such undertakings are incurring losses.
Over 60% of the public sector enterprises in Punjab are in the red, with those in the power, agriculture and allied activities, and services sectors reporting the highest losses, according to the 16th Finance Commission report.
Of the 30 state public sector enterprises (SPSEs), including government companies, government-controlled undertakings and statutory corporations, for which financial accounts were available, 18 have been incurring losses, 11 are making profits, and one is breaking even.
The proportion of loss-making SPSEs in Punjab is the second highest among the non-north eastern and hilly (non-NEH) states in the country, just behind Telangana, where 11 of 18 such undertakings are incurring losses.
Telangana, Punjab, Kerala and Karnataka stand out for a large proportion of loss-making enterprises, the report said.
The commission’s report was tabled by Union finance minister Nirmala Sitharaman in the Lok Sabha on February 1.
SPSEs in Punjab, about half of which operate in the power, agriculture and allied sectors, have been in dire financial straits having accumulated losses of more than ₹18,000 crore (as per 2024 CAG report), despite having the highest turnover-to-gross state domestic product (GSDP) ratio. Their turnover as percentage of GSDP stands at 10.9 – almost double of the national average of 5.7 – as per the report.
The state has a total of 49 public sector companies and corporations, but 16 of them, including some in travel and tourism, and textile, leather and other industrial sectors, are totally inactive.
‘Close down or privatise loss-making SPSEs’
The commission, headed by renowned economist Dr Arvind Panagariya, studied 1,635 SPSEs across the country and recommended that evaluation of their performance and closure of inactive enterprises to reduce the fiscal strain, as many continue to receive budgetary support from state governments.
“Like inactive SPSEs, there is a need for stricter scrutiny of loss‑making ones. One rule of thumb worth considering is for the concerned department to mandatorily take to the cabinet any enterprise incurring losses in three out of four consecutive years for consideration of closure, privatisation, or continuation,” it said.
The commission further suggested that the idea of state‑level privatisation of SPSEs needs greater attention, adding that states should consider framing a state‑level policy similar to the central government’s new public sector enterprise policy. In 2018, the Punjab Governance Reforms and Ethics Commission (PGREC), in its report to the then Congress government, had stressed the need to review their utility and viability by a third-party professional assessment. It also suggested that there should be no further investment in boards and corporations, no recruitment of new staff, and no appointment of non-officials. However, most of its recommendations were not acted upon, and public undertakings continue to incur losses.
‘Parking garages for favourites, defeated candidates’
Former chief secretary KR Lakhanpal, who headed both the PGREC and the Sixth Punjab Finance Commission, said the state needs to stop running businesses except in sectors of strategic importance. He said that successive governments have failed to take measures to set things right and reduce the financial burden posed by several public sector undertakings on the state exchequer.
“These have been used by governments as parking garages to accommodate their favourites and defeated candidates. They are given offices and perks. They do not have much work to do,” he remarked. Like its predecessors, the present AAP government has also been on a spree to appoint loyalists as chairpersons of public sector undertakings that are either incurring losses or are virtually non-functional. However, a party leader said the appointments in boards, corporations and other such undertakings are the prerogative of the government.
In dire straits
*Of the 30 state public sector enterprises (SPSEs), for which financial accounts were available, 18 have been incurring losses, 11 are making profits, and one is breaking even.
*The proportion of loss-making SPSEs in Punjab is the second highest among the non-north eastern and hilly states in the country, just behind Telangana.
*SPSEs in Punjab, about half of which operate in the power, agriculture and allied sectors, have been in dire financial straits having accumulated losses of more than ₹18,000 crore
*The state has 49 public sector companies and corporations, but 16 of them, including some in travel and tourism, and textile, leather and other industrial sectors, are inactive
