Are many of Assam’s PSU becoming white elephants?

The government of Assam has a significant stake in the state-run public sector units (PSU), which are in the form of direct loans, equity and guarantees of repayment of loans to financial institutions.

But the sector-wise analysis of the government of Assam’s investments to the PSU which is to the tune of Rs. 5,071.34 crores till 2019 as per the Comptroller and Auditor General Report is not fetching any tangible returns for the government. And the taxpayer's money is being invested in many of these loss-making companies without any proper due diligence.

As on 31 March 2019, there were 50 PSUs and one State Electricity Regulatory Commission under the audit jurisdiction of the Comptroller and Auditor General of India (C&AG).

These PSUs include 47 Government Companies and three Statutory Corporations (including 10 Subsidiaries of different State Government Companies).

Out of the 50 PSUs, there were 34 working PSUs and 16 non-working PSUs (all Government Companies). None of these Government Companies was listed on the stock exchange.

According to the CAG statistics, it is clear that the thrust of GoA investment during the last five years was in the power sector PSUs.

The investment in the PSUs of the power sector increased by 38.01 per cent from Rs. 2,691.86 crores in 2014-15 to Rs. 3,715.12 crores in 2018-19.

Analysis of PSU loans further revealed that GoA loans under Power Sector have been pending for more than five years (Rs. 971.24 crores) including Rs. 415.51 crores (43 per cent) transferred to the power sector PSUs during the unbundling of the erstwhile Assam State Electricity Board.

Furthermore, more than 95 per cent (Rs. 418.21 crores) of the total loan of Rs. 437.85 crores of the Assam Government is outstanding under the Agriculture and Allied Sector, pertained to one loss-making PSU (Assam Tea Corporation Limited), which was dependent on the GoA for meeting its administrative expenses.

Similarly, a one-third portion (Rs. 43.75 crores) of GoA loans under the Infrastructure Sector (total loan in this sector being Rs. 130.65 crores) belongs to two loss-making PSUs and the entire GoA loans (Rs. 63.62 crores) under the Manufacturing sector.

According to CAG observation, since the chances of recovery of GoA loans outstanding against loss-making/defunct PSUs were remote, the State Government needs to critically review these loans for appropriate decisions. The State Government may also enforce recovery of loans outstanding against the power PSUs.

However, there is no action report taken by the state government on CAG observation, the report of which was submitted in 2021.

ALSO READ : PSUs to open 300 brick and mortar banks in unbanked areas of India.