The Chhattisgarh government has invested a substantial amount of Rs 7,447.77 crore in state-owned public sector undertakings (PSUs). Despite this significant investment, the return on investment has been disappointingly low, not even reaching 1%.
Audit Report by Comptroller and Auditor General of India (CAG)
The Comptroller and Auditor General of India (CAG) presented an audit report on the state’s finances for the year ending March 31, 2023. This report was tabled in the state Assembly and highlighted the poor financial health of most PSUs in the state.
Overview of Investments
As of March 31, 2023, the Government of Chhattisgarh had invested Rs 7,447.77 crore in various entities, including:
- 10 statutory corporations
- 28 government companies
- 21 joint stock companies
- 2 rural banks
- 1,460 co-operative institutions
Return on Investment
During the financial year 2022-23, the return on this substantial investment was a mere Rs 6.20 crore, translating to a return rate of just 0.08%. In contrast, the government paid an average interest rate of 6.91% on its borrowings during the same period.
Composition of Investments in State PSUs
As of March 31, 2023, the total investment in the 28 state PSUs was divided into:
- 33.79% equity capital
- 66.21% long-term loans
The long-term loans amounted to:
- Rs 977.03 crore advanced by central and state governments
- Rs 12,900.87 crore raised from other sources
Increasing Losses in PSUs
The financial performance of the PSUs has been deteriorating, with losses increasing from Rs 433.14 crore in 2020-21 to Rs 1,143.10 crore. The accumulated net losses reported by seven loss-making PSUs amounted to Rs 10,034.72 crore, against an equity of Rs 2,972.81 crore (comprising paid-up capital plus defaulted loans). This has led to a depletion in the net worth of these PSUs to a negative Rs 7,061.91 crore as of March 31, 2023.
Erosion of Net Worth
The report further noted that the net worth of five out of 28 PSUs had been completely eroded by accumulated losses, resulting in negative net worth for these entities.
Profitability of PSUs
Despite the overall grim scenario, there were some positive signs. In the financial year 2022-23, 10 out of 20 PSUs earned a profit of Rs 879.22 crore. This is an improvement compared to 2020-21, when nine PSUs earned a profit of Rs 540.16 crore.
