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Wind up non-working PSUs: CAG
July, 27th 2010

The Comptroller and Auditor General (CAG) of India has advised the Bihar government to wind up its non-working Public Sector Undertaking (PSUs). It has identified 40 such PSUs which altogether employ 2,635 employees.

"The government may make a decision regarding winding up of remaining 25 PSUs (15 PSUs have commenced liquidation process) whereas no decision about their continuation or otherwise has been taken after they became non-working," the CAG suggested, adding the government may consider setting up a cell to expedite closing down its non-working companies.

In recent years, Bihar's GDP has grown considerably and touched a high-level, but its PSUs hardly made a contribution in this growth. The state's 23 working PSUs, out of a total of 63, registered a turnover of Rs 2,056.89 crore during 2008-09 which is equal to just 1.56 percent of the state GDP and this indicated an insignificant role played by the PSUs in its economy.

Most of the PSUs incurred heavy losses. Of the 63 companies only eight earned some profit to the tune of Rs 40.85 crore, but others altogether incurred losses of Rs 669.47 crore. The Bihar State Electricity Board (BSEB) topped the list incurring a loss of a staggering Rs 584.70 crore during the financial year 2008-09. The Bihar State Road Transport Corporation incurred a loss of Rs 55.74 crore during the period.

As per the 2008-09 report of the CAG, the state government made an investment of Rs 9,140.69 crore in 63 PSUs through capital and long-term loans and also contributed Rs 1,206.93 crore towards equity, loans, grants and subsidies. All these PSUs employ 21,250 employees.

The companies that earned profit include the Bihar State Financial Corporation, Bihar State Mineral Development Corporation and Bihar State Beverage Corporation. They altogether earned a profit of Rs 39.08 crore and other five PSUs altogether earned Rs 1.77 crore profit, including Rs 1.45 crore by the Bihar State Tourism Development Corporation which was earlier incurring loss.

The non-working companies include: the Bihar State Water Development Corporation, Dairy Corporation, Hill Area Lift Irrigation Corporation, Agro Industries Development Corporation, Fruit & Vegetable Development Corporation, Insecticide Ltd, Small Industries Corporation, Industrial Development Corporation, Handloom & Handicraft Corporation, Panchayati Raj Finance Corporation, Construction Corporation, Sugar Corporation, Pharmaceutical & Chemicals Development Corporation, Drugs & Chemicals Ltd, Textile Corporation, Export Corporation, Finished Leather Corporation, Leather Industries Development Corporation. They keep a manforce of 2,635 employees.

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