BANGALORE: The state government, which has over the years invested over Rs. 32,483 crore in over 88 public sector enterprises including electricity supply companies, KSRTC, MSIL and Mysore Paper Mills, has earned a mere Rs. 29.48 crore at the end of March, 2010. A big chunk of this investment (Rs. 30,925 cr) was made in just six years between 2005-2010 on 63 companies.
In a report to the state government recently, the Public Accounts Committee (PAC) headed by Deputy Leader of the Opposition in the Karnataka Assembly T B Jayachandra recommended to the government to ensure companies adopted professionalism and earned profits.
Most of the stricken PSUs are barely functioning with infusion of capital equity by the government and borrowings from the market.
The PAC has revealed that the Karnataka Bhagya Jala Nigam Limited (KBJNL), NERKTC, NWKRTC and KRDL account for over 52 per cent of the total investment (Rs.16,993 crore).
Though companies floated with an investment of over Rs.16,953 crore in 2005-2010 have losses of over Rs. 868 crore, the state invested Rs. 5,039 crore in 2009-10.
The government invested Rs.122 crore in Karnataka State Finance Corporation though its net asset worth was minus Rs. 110 crore.
During 2010, the state government converted interest free advances of Rs. 500 crore to five Escoms as equity capital.
While the government invested in companies by borrowing from outside at high interest rates of upto 7.6 per cent per annum, the profits were less than 0.1 per cent.
The government also borrowed `8,047 crore during 2005-10 but recorded meagre returns.
Warning that this would hurt the financial stability of the government, the PAC recommended constitution of an expert committee to reverse the trend and evolve a well designed criterion for repayment.