Only 18 of 74 state PSUs in Bihar have finalised their accounts in the last three years and 65 of them have arrears in accounts from 1977-78 onwards, according to the CAG report of the year ended on March 31, 2017.
The CAG report tabled in the state legislature has cautioned that delay in finalisation of accounts or their non-preparation are fraught with the risk of misrepresentation of facts, fraud and misappropriation.
As regards the performance of those 18 PSUs out of 30 in working condition, the report said ten earned profit of Rs 278.18 crore, seven incurred a loss of Rs 1437.93 crore while the remaining one is a holding company working on no profit no loss basis.
These 18 PSUs generated an average negative return on investment of 6.14 per cent, well below the average cost of borrowing at 8.49 per cent during 2014-15 to 2016-17.
Thus the loss to the public exchequer as a result of investment in these 18 PSUs in the past three years amounted to Rs 1159.75 crore. The loss by the remaining 56 PSUs could not be assessed owing to non-finalisation of their accounts, the report said.
Out of 30 working PSUs only nine had finalised their accounts for 2016-17. And yet the state government had extended budgetary support of Rs 4476.54 crore to 10 working PSUs during the period their accounts were in arrears. This included Rs 2467.06 crore to seven PSUs whose accounts were in arrears for more than three years.
The lack of financial accountability in the Bihar State Road Transport Corporation is "so serious that the CAG has refused to provide an opinion" on their accounts for 2003-04 to 2005-06 when finalised during May 2014 to September 2015.
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The state government provided loans of Rs 775.01 crore to the corporation during 2006-17 when its accounts were in arrears. It has neither paid back the loan amount nor interest dues of Rs 407.63 crore from 2010-11, the report said.
The CAG has recommended that the finance and the administrative departments concerned should initiate steps to ensure that the budgetary support is extended only to those PSUs whose accounts are current.
The total profit of a major PSU, Bihar State Education Infrastructure Development Corporation increased significantly during 2012-13 to 2015-16 from Rs 5.24 crore to Rs 70.51 crore, but declined to Rs 22.96 crore in 2016-17 mainly because of slow execution of work and reduction in certain rates by the state government.
Besides, the corporation failed to safeguard its financial interests by keeping its large surplus funds ranging from Rs 293.84 crore to Rs 866.32 crore in savings accounts, which resulted in loss of interest income of Rs.62.30 crore to the project fund during 2012-17.
It also suffered from poor planning. It failed to include furniture and other essential amenities in the estimates of 297 model schools and construction could not be initiated in case of 71 model schools because of non-availability of land. As a result, the Model School Scheme failed in its entirety even after incurring an expenditure of Rs 555.69 crore.
The report has also pointed out that inappropriate action on the part of the Bihar State Power (Holding) Company in revision of power purchase agreement has resulted in loss of Rs 61.70 crore.
The Bihar State Text Book Publishing Corporation unnecessarily renewed services of consultant for three years paying Rs 1.08 crore even though the consultant had already given its report. Besides, failure to act on the recommendations of the consultant resulted in avoidable penalty payment of Rs 50.27 crore.
The report is also critical of an expenditure of Rs 2.06 crore by some PSUs on purchase of gift items for legislators, press reporters, senior officers and other dignitaries.