The financial health of PSUs in J&K reflects a deeper structural crisis that goes far beyond balance sheets. The fact that a majority of these Government-owned enterprises continue to operate at losses year after year is not just an accounting problem-it is a question of governance credibility, economic planning and administrative intent. In a region that is already revenue-deficient and heavily dependent on central assistance, the continued existence of chronically loss-making enterprises raises serious policy and fiscal concerns.
These public sector undertakings were meant to build industrial capacity, create employment, stabilise markets, support small producers and ensure balanced regional growth. Over time, however, many of these entities have drifted away from commercial discipline and evolved into administrative extensions of Government departments. The result is predictable: high operational costs, low productivity, delayed decision-making, and weak revenue generation. The majority of profit-making PSUs have tie-ups with central PSUs.
One of the most worrying aspects is the mismatch between the region’s economic strengths and the performance of the enterprises meant to promote them. The region is internationally recognised for handicrafts, handloom products, horticultural produce and tourism potential. Yet, several corporations created specifically to capitalise on these strengths have struggled to generate profits. This suggests that the problem is not a lack of market demand but failure in strategy, marketing, supply chain integration and professional management.
Perhaps most puzzling is the horticulture marketing corporation remaining loss-making despite the region producing some of India’s finest apples, walnuts and saffron. Similarly, the cement PSU struggling to secure local procurement contracts despite massive infrastructure spending points towards deep structural inefficiencies. The power-related enterprises face a different but equally serious set of challenges. High technical losses, weak billing recovery systems, outdated infrastructure and delayed tariff rationalisation create a cycle of financial losses. Without aggressive reforms in operational efficiency and technology adoption, these sectors are unlikely to achieve financial stability.
Another key concern is the absence of commercial accountability. In private sector enterprises, continuous losses trigger restructuring, leadership changes or even closure. In contrast, many public enterprises continue to operate despite poor performance because their survival is not linked directly to profitability. Financial gaps are routinely filled through Government support, grants or budgetary adjustments. This creates a culture where financial discipline becomes secondary and operational inefficiency becomes institutionalised. Administrative structure is a major challenge. Multiple Government bodies often operate in similar or overlapping sectors such as trade promotion, industrial facilitation and business development. This leads to fragmentation of resources, duplication of infrastructure and internal competition for limited business opportunities. Another structural issue is the lack of performance-linked evaluation systems. In the absence of measurable performance standards, losses continue without consequences.
Despite these challenges, revival is not impossible. The first step must be to classify enterprises into three categories: strategic, potentially viable, and chronically unviable. Strategic enterprises providing essential public services may require continued Government support, but must undergo operational reforms to reduce financial burden. Potentially viable enterprises need professional restructuring, financial restructuring and management autonomy. Chronically loss-making enterprises with no clear turnaround potential should be considered for closure, asset monetisation or privatisation. Technology adoption can also significantly improve efficiency. Digitised procurement, automated billing systems, supply chain analytics and real-time financial monitoring can reduce leakages and improve operational performance. Public-private partnerships offer another viable pathway. Instead of full ownership, the Government can retain strategic control while allowing private sector participation in operations, marketing and technology integration. Rationalisation and merger of overlapping enterprises are equally important. Consolidated entities with a larger operational scale can reduce administrative costs and improve market competitiveness. Privatisation, though politically sensitive, cannot be ruled out for enterprises that have shown consistent losses without any turnaround prospects. Strategic disinvestment can unlock asset value and reduce fiscal pressure while allowing professional business management to take over operations.
Ultimately, public enterprises must justify their existence through economic contribution. In a region with limited fiscal space, every rupee spent on sustaining loss-making entities is a rupee diverted from social welfare, infrastructure and development. What is required is a decisive shift from protection-based survival to performance-based existence.
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