A Number of PSUs Look Desperately for a light at the Tunnel End, Or even a Moving Train...
Navratnas have ensured in the recent past that the world looks at Indian public sector undertakings (PSUs) in a different light. But then, this is just like most aspects in India, where the large numbers at the bottom of the PSU pyramid are ignored for the few stars at the top, who bring up the averages as well as the GDP contributions for the nation. But such an ignorance of the bottom is suicidal at best.
Our great nation has around 246 PSUs in all. Talking in numbers, the net profitability ratio of PSUs has increased from 8% to 14.5% since the last one decade on an average. But then, given the mammoth number of PSUs, this seems quite miniscule – especially when the economy is experiencing a steep northward trend. Of the 246 PSUs, 33 are yet to commence operations. Out of the 213 functioning PSUs remaining, more than 50 PSUs are in losses. Their total contribution to the GDP of the country is merely 6.5%. A recent CAG Audit 2008-09 report points out that 15 PSUs of Gujarat made a loss of Rs.25.4 billion in the last three years. On a yoy basis, the loss has increased alarmingly from Rs.4.41 billion in 2006-07 to Rs.19.63 billion in 2008-09. This is just not confined to Gujarat.
Another CAG report found that Public Sector Undertakings (PSUs) in Andhra Pradesh had accumulated losses of Rs.23.52 billion for 2008-09 and further concluded that PSUs could have controlled losses of up to Rs.12.38 billion with better management. The latest CAG report on Jharkhand reveals that 10 public sector undertakings in the state posted an accumulated loss of Rs.18 billion and made “futile investments of Rs.743 million” for 2008-09.
Our great nation has around 246 PSUs in all. Talking in numbers, the net profitability ratio of PSUs has increased from 8% to 14.5% since the last one decade on an average. But then, given the mammoth number of PSUs, this seems quite miniscule – especially when the economy is experiencing a steep northward trend. Of the 246 PSUs, 33 are yet to commence operations. Out of the 213 functioning PSUs remaining, more than 50 PSUs are in losses. Their total contribution to the GDP of the country is merely 6.5%. A recent CAG Audit 2008-09 report points out that 15 PSUs of Gujarat made a loss of Rs.25.4 billion in the last three years. On a yoy basis, the loss has increased alarmingly from Rs.4.41 billion in 2006-07 to Rs.19.63 billion in 2008-09. This is just not confined to Gujarat.
Another CAG report found that Public Sector Undertakings (PSUs) in Andhra Pradesh had accumulated losses of Rs.23.52 billion for 2008-09 and further concluded that PSUs could have controlled losses of up to Rs.12.38 billion with better management. The latest CAG report on Jharkhand reveals that 10 public sector undertakings in the state posted an accumulated loss of Rs.18 billion and made “futile investments of Rs.743 million” for 2008-09.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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