Sinlung /
03 August 2015

Mizoram Cabinet Nod for Closure of 3 PSUs, Downsizing 2 Others

The move to overhaul all state-owned enterprises in Mizoram has been prompted largely by an agreement between the state government and the Asian Development Bank.

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Chief Minister of Mizoram Pu Lal Thanhawla.

The state Cabinet has approved a proposal to close down three of Mizoram’s Public Sector Enterprises and restructure and downsize two others.

The move to overhaul all state-owned enterprises in Mizoram has been prompted largely by an agreement between the state government and the Asian Development Bank as part of a USD 100 million loan aimed at managing state finances better.

Another reason has been that successive CAG reports show the PSEs have been making losses year after year and contributing just a fraction of a percentage to the state’s coffers, according to documents accessed by The Indian Express.

The state Cabinet has approved the closure of the 27-year-old Zoram Handloom and Handicrafts Development Corporation Limited (ZOHANDCO), the 24-year-old Zoram Electronics Development Corporation Limited (ZENICS) and the 22-year-old Mizoram Agricultural Marketing Corporation Limited (MAMCO).

The government had earlier this month notified the Mizoram State Enterprises’ Early Retirement Rules 2015 for employees, and has also set in place a mechanism to absorb employees who do not opt for early retirement. This will be done though relaxation of the state’s Public Service Commission’s selection process, the documents show.

The Cabinet has also approved the “downsizing and restructuring” of two other PSEs — the 30-year-old Zoram Industrial Development Corporation Limited (ZIDCO) and the 26-year-old Mizoram Food and Allied Industries Corporation Limited (MIFCO).

All five PSEs have largely been headed by ruling MLAs for years and even decades, and all but one are currently headed by junior Congress MLAs except for MIFCO, which is headed by a senior Congress leader.

The PSEs together employ about 270 people.

The latest CAG report, tabled before the state assembly this month, shows that the PSEs overall incurred annual losses of between Rs 4.86 crore at its peak in 2010-11 and 1.70 crore at its lowest ebb in 2013-14.

There has been no year in the past six years they have not incurred losses as a group (except for ZIDCO, which registered profits once) even as their annual turnovers over the same period hovered between just 0.02% to 0.15% of the state’s GDP.

The PSEs’ loss-making nature has however been around even earlier. An Asian Development Bank assessment from July 2009 (a month prior to the approval of the USD 100 million loan for the state’s public sector financial reforms) had red-flagged the issue.

“The performance of state public sector enterprises (PSEs) has … affected the state budget. Currently, all of the five small PSEs in Mizoram are loss-making… The PSEs are in financial distress requiring huge amounts of budgetary support to sustain them…. In spite of a periodic infusion of equity capital and grants, the companies continue to report losses,” the ADB said in a report to its board of directors.


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