The Comptroller & Auditor General’s (CAG’s) reports on Central public sector undertakings (PSUs) for 2001-02 has underlined the basic weakness of the public sector — its inability to face competition. Out of 136 profit-making PSUs, only 26 in four sectors — coal & lignite, telecommunications, petroleum and power — earned Rs 38,242.41 crore, or 81.53 per cent of the total profits, Rs 46,905.14 crore. In these four sector, PSUs enjoyed monopoly or near-monopoly status in 2001-02. The 120 loss-making PSUs incurred total losses worth Rs 11,341.09. Which means that the non-monopoly sector PSUs actually lost Rs 2,677.36 crore in 2001-02. The CAG has commented that “merely 26 PSUs operating partially under the administered/regulated prices had contributed 81 per cent of the total profit. Losses were reported by as many as 120 PSUs, out of which 97 eroded their equity bases (Rs 12,976 crore) many times owing to losses accumulating (Rs 60,996 crore) over the years.” In accumulated losses of the 97 PSUs jumped by 34 per cent in two years, from Rs 45,527 crore in 1999-2000 to Rs 60,996 crore in 2001-02, says the CAG, adding that two-thirds of these companies have been referred to the Board for Industrial & Financial Reconstitution (BIFR). “Out of 136 profit-making PSUs, only 86 PSUs declared dividend for the year 2001-02 amounting to Rs 8,201.57 crore, and of of this Rs 5,959.20 crore were paid/payable to the Government of India. The latter represented 6.36 per cent return on the total investment by the Government of India (that is, Rs 93,755.40 crore) in all the PSUs,” says the CAG. Inventory control and collection of debts by PSUs remain the areas of serious concern, according to the CAG. “Most of the PSUs continued to rely for their survival substantially on government support, including orders.”
