A damning report from the Comptroller and Auditor General of India (CAG) has exposed a severe financial crisis within Madhya Pradesh's state-owned enterprises. The audit, tabled in the state legislative assembly on Thursday, reveals that the net worth of six prominent public sector undertakings has been alarmingly eroded, effectively reducing them to scraps.
Financial Erosion: From Equity to Negative Worth
The CAG report for the period ending March 2023 paints a grim picture. The combined net worth of the six identified State Public Sector Enterprises (SPSEs) stood at a staggering negative ₹42,410.39 crore. This is against a total equity investment of ₹18,177.00 crore by the state government, indicating a complete washout of capital.
The report states that accumulated losses over time have completely eaten away the capital of these companies. Their net worth is now either zero or has plunged deep into negative territory. The six loss-making entities are: MP Madhya Kshetra Vidyut Vitaran Company Ltd, MP Poorv Kshetra Vidyut Vitaran Company Ltd, MP Paschim Kshetra Vidyut Vitaran Company Ltd, DMIC Vikram Udyogpuri Ltd, DMIC Pithampur Jal Prabandhan Ltd, and MP Hotel Corporation Ltd.
In a shocking detail, the audit notes that in these six SPSEs, the state government's equity of ₹36 crore and outstanding loans amounting to ₹25,236.90 crore as of March 31, 2023, are now at severe risk.
Systemic Failures in IT Parks and MSME Development
The audit scrutiny extended beyond balance sheets to operational failures. The report heavily criticised the Madhya Pradesh State Electronics Development Corporation Ltd (MPSEDC) for its handling of IT and manufacturing parks.
The MPSEDC failed to conduct any demand assessment before developing IT infrastructure, leading to uneven development and allotment of plots across the state. The development pace was sluggish, with only 26 out of 240 plots commencing commercial production by March 2023. This generated a mere 576 jobs against an expectation of 14,548, achieving only four percent of the employment target.
Encroachment emerged as a major issue, with local residents taking over 13.57 acres in the Bhopal and Indore IT parks. This resulted in a dual loss: a development expenditure loss of ₹3.62 crore for MPSEDC and a potential earnings loss of ₹2.28 crore from land premium.
The CAG flagged the absence of a long-term strategic plan and a single-window clearance system as mandated by the state's IT policy. Furthermore, there was no mechanism to monitor lessees' activities after plot allocation.
Lax Controls and Missed Policy Goals
The audit also turned its lens on the Madhya Pradesh Laghu Udyog Nigam Ltd (MPLUN), the nodal agency for cluster activities under the state's MSME Development Policy, 2021. The findings were disappointing.
The company did not formulate any strategic plans for promoting and developing small-scale industry (SSI) units. Instead of focusing on systematic growth and handholding for MSMEs, MPLUN limited itself to managing state emporia and executing deposit works for other government agencies.
The CAG noted lax internal controls, pointing out that the company did not comply with several requirements of the Companies Act. The auditor recommended that MPLUN urgently evolve a strategic plan to adopt the cluster development approach envisioned in the 2021 MSME policy to promote industrial growth.
Similarly, a lack of systematic planning and a clear roadmap to augment capacity was noted for MP Urja Vikas Nigam Ltd, where coordination among stakeholders in the field could not be ensured.
The comprehensive CAG report underscores deep-seated issues in strategic planning, financial management, and policy implementation within Madhya Pradesh's public sector, raising significant concerns about governance and accountability.
