Puducherry Govt should reconsider continuing with loss-making PSUs, CAG report says

In its annual audit report, tabled in the Legislative Assembly on Thursday, the CAG said six of 12 PSUs incurred losses to the tune of ₹52.37 crore

The Comptroller and Auditor General, in its report on the financial affairs of the Union Territory, has asked the Puducherry government to reconsider continuing with long years of loss-making Public Sector Undertakings (PSUs) if they did not serve any social welfare purpose.

In its annual audit report, tabled in the Legislative Assembly on Thursday, the CAG said half of the total of 12 PSUs incurred losses to the tune of ₹52.37 crore. The other six units earned a profit of ₹28.05 crore during the period.

Thus the aggregate loss of the government-owned companies was to the tune of ₹24. 32 crore. As on March 2020, there were eight companies with accumulated revenue losses to the tune of ₹801.88 crore. The net worth of seven out of eight units had been completely eroded, because of accumulated loss and their net worth was negative.

However, Swadhashee Bharathi Textile Mills Limited and Puducherry Tourism Development Corporation Limited which incurred losses in 2018-19, reported profits during 2019-20. While the profit earned by the mill was mainly due to a government grant of ₹21.53 crore towards the settlement of electricity dues, the Corporation reported a profit due to an increase in business revenue, the report said.

On the revenue side, the report said there were wide fluctuations in the revenue buoyancy of the Union Territory (UT) due to the implementation of the Good and Services Tax (GST) in 2017-18. The GST implementation had also impacted the actual receipts of the government. During the period, the territorial administration received a sum of ₹862 crore as compensation from Centre for the loss incurred due to GST implementation. The government’s tax revenue decreased from ₹3,188 crore in 2018-19 to ₹2,475 in the next financial year.

On the fiscal management side, the report said the territory ended up with a revenue deficit of ₹55 crore during 2019-20. The existence of a revenue deficit was a cause of concern as receipts received were not able to meet even revenue expenditure. The loans and advances from the Centre also decreased from ₹1,839 crore in 2015-16 to ₹1,418 crore in 2019-20.

Puducherry was not able to contain the ratio of fiscal management as envisaged in the Fiscal Road Map prepared by the government in 2012. The ratio of fiscal deficit to the Gross State Domestic Product during 2019-20 was one per cent as against the target of 0.84 per cent contemplated in the FRM, the report pointed out.

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