How long will govt feed these White Elephants?

THIRUVANANTHAPURAM: While Kerala Government spends tens of thousands of crores to sustain the 100 and odd public enterprises, the government gets a pittance in return, as per the official financial statistics available on these state level public enterprises (SLPEs).

For example, while the total paid-up capital of the state-owned active enterprises at the end of the year 2021-22 stood at Rs21,709.34 crore and the total investments of these SLPEs were at Rs 62,261.96 crore, the government got back just Rs11.89 crore as dividend from four SLPEs.

The statistics of the financial year 2022-23 (FY23) are yet to be released. In fact, historically, less than 40 per cent of the state-owned public enterprises go for timely audit of their financials.

The dividend payout during FY22 was much better than that in the previous year, which was a mere Rs99 lakh. The highest dividend at 9.28 crore, as expected, was contributed by Kerala Minerals & Metals Ltd (KMML).

The other contributors include Oil Palm India Ltd (OPIL) at Rs1.18 crore; Pharmaceutical Corporation of Kerala Ltd (PCKL) at Rs1 crore and Kerala Tourism Infrastructure Ltd (KTIL) at Rs43 lakh.

Tax income

However, it could be viewed as a big relief that during the year 2021-22 (FY22),the SLPEs have together contributed an amount of Rs13,032 crore as tax compared with Rs12,019 crore in the previous year.

But interestingly, 97.50 per cent of this tax payout has come from a single company, Kerala State Beverages Corporation (BEVCO) that amounted to Rs12,706 crore.

This is because BEVCO levies a tax at a whopping 251 per cent on its products in order to maximize the income flowing into the state exchequer from BEVCO.

According to tax experts, the designing of this tax rate has been structured so as to avoid the sharing of corporate income tax with the Central Government.

KV Thomas view

If what Prof KV Thomas, the Special Representative of Kerala in New Delhi, echoes is the state government’s view on the state level public enterprises (SLPEs), it could have serious ramifications, according to experts on public finance.

KV Thomas, in a recent interview to myfinpoint, said that despite the sorry state of the public enterprises, the state government would not favour privatizing these companies fully or even partly as that is not the government policy on SLPEs.

“These SLPEs serve a different purpose and that need not be essentially the short-sighted profitability. On the contrary, these public sector undertakings add to the overall growth of the state economy in long run,” said Thomas while talking to myfinpoint (KV Thomas interview can be viewed shortly on myfintv)