NEW DELHI, Oct 3: While the Government continues to dither over whether or not to close down loss-making public sector units (PSUs), a startling estimate by the Finance Ministry shows that the losses of these very PSUs have wiped out close to a full year's Gross National Product (GNP).The annual PSU loss of around Rs 14,000 crore is around three times what the Central Government spends in the critical agriculture sector today, or even on health and family welfare.It is also double the amount spent by the Government on fertilisers, or the subsidy given through the Budget to food and fertilisers. Ministries controlling the PSUs say the Finance Ministry is classifying the losses and plans to bring out a paper explaining the benefits of closing them down.Senior Finance Ministry officials, however, admit that they are fighting a losing battle. No decision has been taken even on units the Bureau of Industrial Finance and Restructuring (BIFR) has recommended be wound up.The last Cabinet meeting in Septemberput off a decision on eight such units, as reported in The Indian Express yesterday, despite their losses in 1996-97 alone adding up to Rs 264 crore.In the case of the Cycle Corporation of India, one of the eight PSUs, its wage bill is 14 times, and its losses 30 times, its turnover. With strong political opposition to any move to either close down, or even privatise any of these units, the government has, by and large, chosen not to take into consideration the Disinvestment Commission recommendations.The Commission had recommended that four units be closed down, but no action has been taken so far. It had suggested a strategic sale of 19 units, but all that the Government has done is initiate the process of finding financial advisers for two companies.What this delay will mean can be judged by, say, what the latest Disinvestment Commission report has to say on Air-India. Air-India has made operating losses of around Rs 900 crore in the last three years and, according to the Commission, willhave wiped out its complete net worth within the next two years.The Finance Ministry's estimates of losses by the centrally-owned PSUs run contrary to reports put out by the Department of Public Enterprises (DPE) each year. This is because, while the DPE mechanically adds up various PSUs' losses and profits these get inflated due to the oil PSUs' monopoly profits the Ministry has calculated the opportunity cost of Government investments by way of equity in these companies.So, the DPE says the PSUs made a profit of Rs 10,258 crore in 1996-97. But the Ministry argues that if they had invested the Rs 2,02,021 crore capital in these companies in some other venture, they would have got a return of 12 per cent, or Rs 24,242 crore. The difference between this figure and the DPE's, is the loss for the year.
