Hyderabad: The 16th Finance Commission, in its report tabled in Parliament on Sunday, highlighted the weak financial position of state public sector enterprises (SPSEs) in Telangana, pointing out that a majority of them are running at a loss.As of March 31, 2023, Telangana had 18 SPSEs. Of these, 11 were loss-making, while only six reported profits. This means most state-run enterprises in Telangana are not financially sustainable, falling short of the goal of operating as commercially viable entities.
The commission noted that Telangana’s situation reflects a larger national trend, where many SPSEs across states struggle with poor finances. Several operate at a loss or barely break even. Such weak performance limits their ability to reinvest in operations, increases their dependence on government support, and reduces their contribution to overall economic growth. Financial viabilityIn an inter-state comparison, Telangana is grouped with Goa, Karnataka, Kerala, Punjab, and West Bengal, all of which report a high share of loss-making state enterprises. This shows that the challenge is not unique to Telangana but part of a broader issue related to governance and financial viability of SPSEs across multiple states. The economic importance of SPSEs is often measured by the turnover-to-GSDP ratio, which indicates how much these enterprises contribute to the state economy. In Telangana, this ratio stood at 7% in 2022-23, a moderate level compared to other states, where it ranges from negligible to over 10%. Reliance on subsidiesThe report identified several key concerns for Telangana. These include the continued operation of loss-making enterprises, heavy reliance on budgetary support such as subsidies and grants, and the presence of inactive or non-operational SPSEs that remain on the books. Together, these issues create fiscal pressure, reduce efficiency, and add administrative costs without delivering proportionate public benefits.
