CAG raps Maharashtra govt for rising losses of PSUs

Amid its efforts to maintain its finances despite rising debt and liabilities, the Maharashtra government is facing yet another problem: rising losses incurred by its 64 public sector undertakings (PSUs). Of these PSUs, 37 did earn profit (totallingRs 1,722.87 crore in 2010-11), while 18 incurred losses (Rs 1,509.23 crore overall).

The entities that incurred heavy losses included Maharashtra State Electricity Distribution Company (Rs 782.77 crore), Maharashtra State Road Development Corporation (Rs 422.55 crore) and MSEB Holding Company (Rs 248.23 crore). Further, the accumulated losses of these 64 working undertakings stood atRs 8,401.88 crore as on this March 31. The Comptroller and Auditor-General has rapped the state government for these losses. In its latest report, the top auditor observed that the losses were mainly attributable to deficiencies in financial management, planning, implementation of project and running their operations and monitoring.

Moreover, the CAG said the test check of records of these undertakings revealed that these undertakings have incurred losses to the tune ofRs 2,106.19 crore in 2010-11, againstRs 600.93 crore and infructuous investment ofRs 53.36 crore. The report noted that these losses were controllable with better management. According to the CAG, the PSUs are self-reliant only when they discharge their role efficiently. The auditor, thus, emphasised a need for professionalism and accountability in the functioning of PSUs.

As for the working PSUs, they registered a turnover ofRs 49,058.92 crore. This is equal to 4.76 per cent of the state’s GDP, thus indicating an important role they have played in the economy. Further, the government investment towards capital and long-term loans in 62 working and 22 non-working PSUs was of the order ofRs 58,389.55 crore. It grew by 54.48 per cent fromRs 37,796.91 crore in 2006-07. This was mainly because of increase in investment in the power sector, which accounted for 81 per cent of the total investment in 2010-11. The government contributedRs 2,313.58 crore towards equity, loans and grants/subsidies during 2010-11.

The CAG has suggested that the state government consider outsourcing the work relating to preparation of accounts wherever there is inadequate staff or worker lacking in expertise. It should fix the responsibility of managing directors and chief executive officers and chief financial officers of the companies in default. Also, the state dispensation should take up the matter with the Registrar of Companies for invoking penal provisions in appropriate cases to act as a deterrent.

More importantly, the CAG recommended the government to pursue suitable modification and relaxation in the simplified exit schemes for closed/defunct companies as well as extension of benefits of the scheme to non-working PSUs.