SHILLONG, Sep 1: The CAG report for 2022-23 has indicated severe erosion of public wealth in Meghalaya due to the accumulation of massive losses by the “sick” State Public Sector Enterprises (SPSEs).
The CAG stated that the burden on the exchequer to fund these SPSEs is a reason for concern as it involves loss of public wealth.
The state government should consider whether to continue with the SPSEs or terminate them, the report pointed out.
The CAG listed Meghalaya Power Distribution Corporation Limited (MePDCL), Mawmluh Cherra Cements Limited (MCCL), Meghalaya Government Construction Corporation Limited (MGCCL), Meghalaya Transport Corporation (MTC), Meghalaya Infrastructure Development and Financial Corporation Limited (MIDFCL), Meghalaya Mineral Development Corporation Limited (MMDCL) and Meghalaya Tourism Development Corporation Limited (MTDC) among the loss-making entities.
As per the CAG report, 15 of the 17 SPSEs in Meghalaya accrued losses of Rs 4,341.71 crore in 2022-23. Seven of these 15 SPSEs had their equity completely destroyed by cumulative losses of Rs 3,057.36 crore, and as of their most recent finalised accounting, their net worth was “negative”.
Two of the SPSEs made a paltry Rs 1.21 crore in profit, while the others were categorised as loss-making SPSEs.
“According to data provided by the SPSEs, as of March 31, 2023, the state government had invested Rs 3,885.07 crore (Rs 3,291.06 crore in equity and Rs 594.01 crore in long-term loans) in 21 SPSEs. Furthermore, the study stated that in 2022-23, the state government gave grants and subsidies of Rs 797.67 crore to 13 SPSEs.
The government had invested a total of Rs 605.04 crore in these seven SPSEs, consisting of Rs 291.48 crore in long-term loans and Rs 313.56 crore in equity.
About 65% of the overall loss (Rs 371.17 crore out of Rs 572.28 crore) was contributed by MePGCL and MePDCL.
The CAG recommended that the state government should put pressure on the SPSE management to guarantee timely financial statement filing.
“Government investments in such SPSEs remain outside the oversight of the State Legislature in the absence of finalised accounts,” it said.
It was proposed that in addition to analysing the causes of losses in loss-making SPSEs, the government should take action to improve the effectiveness and profitability of these businesses.
Urging the state government to expedite the liquidation process and wind up these non-working SPSEs, the report pointed out that Meghalaya Electronics Development Corporation (since 1986) and Meghalaya Bamboo Chips Limited (since 2021) were neither contributing to the economy nor meeting the intended objectives.
Additionally, the report recommended that the government update the finance accounts and make corrections to the mechanism of documenting the funding granted to the SPSEs in the state finance accounts. The concerned SPSEs may also take immediate action to resolve the inconsistencies.
The CAG stated that while SPSE turnover as a whole increased by 4.44% (Rs 61.58 crore) over the last three years, from Rs 1,386.14 crore (2020–21) to Rs 1,447.72 crore (2022–23), the SPSE turnover’s share of the GSDP fell from 4.10% (2020–21) to 3.39% (2022–23).
“This suggests that the growth in the SPSE turnover from 2020-21 to 2022-23 was not proportionate to the growth in the GSDP during the same period,” it stated.
MePDCL (Rs 1,099.25 crore), MePGCL (Rs 144.50 crore), and MePTCL (Rs 56.55 crore) are the three power sector SPSEs that contributed the most to the turnover of SPSEs in 2022-23. The Meghalaya Government Construction Corporation Limited (Rs 87.54 crore) is the only infrastructure SPSE.
Nevertheless, over the previous three years, the power sector SPSEs’ contribution to the GSDP has declined, falling from 3.82% in 2020–21 to 3.04% in 2022–23, the CAG said.
