Public sector enterprises in Bihar have become white elephants and a big drain on the exchequer, says a survey.
The state Economic Survey presented in the Bihar Assembly during the on-going session presented a bleak future for the 51 government-run companies--17 working and 34 non-functioning --and suggested merger of working PSUs and immediate closure of the non-functioning units.
The survey report said of the 51 government companies as on March 2008, the majority lacked rigorous accountability structure.
The report said the total investment in public sector as on March 2006 was Rs 8631.32 crore (Rs 86.31 billiob), comprising equity of Rs 622.70 crore (7.21 per cent) and long term loans for Rs 8008.62 crore (2.79 per cent). Mainly due to poor turnover and ever increasing losses, the Bihar government has been left with no other choice but to wind up the loss making units, the survey suggested.
The Economic Survey report said the four statutory corporations of the state government - Bihar State Electricity Board (BSEB), Bihar State Financial Corporation (BSFC), Bihar State Road Transport Corporation (BSRTC) and Bihar State Warehousing Corporation (BSWC) are running at huge losses.
The loss of BSEB increased from Rs 54.30 crore (Rs 543 million) in 2004-05 to Rs 854.61 crore (Rs 8.54 billion) accumulated loss of the BSEB has been increasing steeply and stands at more than Rs 1,524 crore (Rs 15.24 billion) at the end of 2007-07.
The return on investments has been negative and the government has paid a subsidy of more than Rs 2,300 crore (Rs 23 billion during the period from 2004-05 to 2006-07," the survey report said.
The total government loan due from the Board stood at more than Rs 6,200 crore (rs 62 billion) as on March 2007, the Survey said.
The Bihar Economic Survey (2009-10) suggested that in view of the poor turnover and continuous losses, the state government might consider their closure/disinvestment.
''The Bihar government has already decided to wind up five working and 12 non-working companies''. The Survey suggested that in order to make the PSUs commercially viable, the Bihar government should consider conversion of loans into equity so as to reduce the interest burden, curtailment of unproductive staff, for which some incentives in the form of Voluntary Retirement Scheme(VRS) be declared and that would again require financial support.
The Economic survey also suggested closure of sick PSUs whose equity base has completely been eroded by accumulated losses. The Survey report also suggested exploring Public-Private - Partnership (PPP) route to revive and rejuvenate some of the PSUs.
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