Tue Mar 25 08:31:03 UTC 2025: ## CAG Urges Kerala to Restructure or Close Loss-Making State Enterprises

**Thiruvananthapuram, March 25, 2025** – The Comptroller and Auditor General of India (CAG) has recommended that the Kerala government review its loss-making State Public Sector Enterprises (SPSEs), potentially shutting down or divesting its stake in unsustainable businesses. This recommendation is part of the CAG’s report on SPSEs for the year ending March 2023, presented to the State Legislative Assembly on Tuesday.

The report highlights that 66 of the 131 operational SPSEs incurred losses totaling ₹1,873.89 crore during the period, with 44 showing completely eroded net worth, amounting to a negative ₹11,227.04 crore. A further 18 SPSEs are classified as defunct or under liquidation, some since 1986-87, adding strain to public finances. The CAG urges the government to expedite the winding-up process for these non-functional entities.

The total government investment in the 131 operational SPSEs stands at ₹22,318.09 crore, comprising equity share capital and long-term loans. While 58 SPSEs reported profits, the accumulated losses across 77 operational entities reach ₹18,026.49 crore.

The report suggests a thorough evaluation of the business models of all loss-making SPSEs. Unsustainable models should prompt closure or divestment, according to the CAG’s findings. This recommendation comes as the ruling CPI(M) party recently endorsed a proposal by Chief Minister Pinarayi Vijayan to restructure underperforming PSUs using a public-private partnership (PPP) model.

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