Punjab State PSUs Plunge into Heavy Losses, Power Sector Blamed for Sharp Decline
According to a recent report by the Comptroller and Auditor General (CAG) of India, the financial health of Punjab's state-owned public sector undertakings (PSUs) has deteriorated significantly. The review, covering the period ending March 2023, shows that these companies collectively shifted from profits to substantial losses during the 2022–23 fiscal year.
Steep Financial Reversal in State Enterprises
The CAG report indicates that working state PSUs in Punjab recorded combined losses of Rs 4,809.76 crore in 2022–23. This marks a drastic reversal from the previous year, when these enterprises earned an overall profit of Rs 1,269.90 crore in 2021–22. As of March 31, 2023, Punjab had a total of 49 PSUs, including 42 government companies, three government-controlled other companies, and four statutory corporations. Among these, five are in the power sector, with 16 inactive companies and 12 subsidiaries of government companies also noted.
Sluggish Growth and Declining Economic Contribution
Despite an annual turnover of Rs 73,542.33 crore, which accounted for 10.92% of Punjab's gross state domestic product (GSDP) in 2022–23, the growth of these PSUs has been lackluster. Over a five-year period, while the state's GSDP grew at a compounded annual rate of 7.05%, the turnover of PSUs recorded a much lower compound annual growth rate of just 0.21%. Consequently, the share of PSU turnover in the state economy declined from 14.23% of GSDP in 2018–19 to 10.92% in 2022–23.
The report further highlights a fall in contributions from key sectors. The share of power sector PSU turnover in GSDP dropped from 6.25% to 5.81%, and agriculture and allied sector enterprises saw a decline from 7.75% to 4.94% over the same five-year span.
Investment and Profit-Making Trends
As of March 31, 2023, total investment in 33 working PSUs stood at Rs 68,938.97 crore, comprising 34.04% equity and 65.96% long-term loans. During 2022–23, the state government infused minimal equity, with Rs 2.05 crore in Punjab Scheduled Castes Land Development and Finance Corporation and Rs 1 lakh in the newly formed Punjab Rural Water Utility.
The number of profit-making enterprises has also dwindled. Thirteen PSUs recorded profits in 2020-21, which decreased to 12 in 2021–22 and further to 11 in 2022–23. The total profit earned by these 11 enterprises fell sharply to Rs 319.97 crore in 2022–23, compared with Rs 1,710.77 crore by the 12 PSUs in the previous year.
Power Sector as Primary Culprit
The report attributes the steep deterioration in overall performance largely to the financial woes of Punjab State Power Corporation Limited (PSPCL). The utility reported a massive loss of Rs 4,775.93 crore in 2022–23, compared with a profit of Rs 1,069.21 crore in 2021–22. This reversal was primarily driven by substantial increases in power purchase costs, fuel consumption expenses, and employee benefit outlays.
Overall, 18 PSUs incurred losses amounting to Rs 5,129.73 crore in 2022–23, up from 17 PSUs reporting losses of Rs 440.87 crore in 2021–22. Despite some enterprises posting profits, dividend payments remained limited, with only three of the 11 profitable PSUs declaring dividends, totaling a mere Rs 3.88 crore.
Audit Findings on Implementation Delays and Irregularities
The CAG report also examined the implementation of the Integrated Power Development Scheme (IPDS) in PSPCL, a scheme launched by the Union Ministry of Power in December 2014 to strengthen sub-transmission and distribution networks and improve metering in urban areas.
Audit findings revealed significant delays and irregularities. Against 11,193 metering cubicles approved under the scheme, only 6,496 were installed by February 2022, due to nearly two-year delays in awarding work and slow execution. This prevented energy accounting for all approved distribution transformers.
Additionally, the audit uncovered irregular claims, such as a grant for 318 sites under a project worth Rs 10.61 crore for computer hardware and peripherals, where work was executed at only 127 sites, leading to an irregular claim of Rs 3.82 crore. The company also claimed Rs 1.64 crore as a grant for 'software assurance' fees, which constituted revenue expenditure that should have been borne by the company under scheme guidelines.
Key technology projects faced delays as well. An Enterprise Resource Planning (ERP) project sanctioned in January 2018 for human resource management, finance and accounts, and material management saw a work order issued only in August 2019 for Rs 42.48 crore. As the project remained incomplete as of May 2024, the company could not avail a grant of Rs 4.37 crore.
Similarly, a project for implementing a real-time data acquisition system, sanctioned in December 2018 at a cost of Rs 7.9 crore, could not be awarded due to tendering delays. This resulted in the company being unable to avail a grant of Rs 4.74 crore, and real-time monitoring of the power distribution network remained unavailable.
The CAG report underscores the urgent need for reforms and better management in Punjab's state-owned enterprises to reverse this troubling financial trend and align with the state's economic growth objectives.
