The Kerala government’s white paper on fiscal health seeks to revive loss-making public sector enterprises

The white paper noted that loss-making PSEs are a permanent drain on the treasury and a burden on the economy. | Photo credit: Reuters

An overhaul of Kerala’s loss-making public sector enterprises (PSEs), with the suggestion that “non-strategic” PSEs may be considered for “disinvestment, privatization or closure where they are potentially unviable”, forms part of the key recommendations in the UDF government’s White Paper on Kerala’s fiscal health.

The document ‘Kerala’s Fiscal Health: A Status Report’ submitted to the state legislature on Thursday (June 4, 2026) also recommends the merger of Kerala State Beverages Corporation (Bevco) and Kerala Civil Supplies Corporation (Supplyco) into a single corporation “with separate liquor distribution and civil supplies divisions”.

The White Paper noted that it is imperative that Kerala State Electricity Board (KSEB), Kerala State Transport Corporation (KSRTC) and Kerala Water Authority (KWA) are reformed in such a way that they stop being a burden on the exchequer. The committee headed by former union cabinet secretary KM Chandrasekhar observed that these three power companies accounted for an overwhelming share of the total losses of PSEs in Kerala. The persistent losses of these PSEs have led to erosion of the net worth of these enterprises and continuous cash losses, forcing many of them to depend on budgetary resources to continue their operations.

Report on the Fiscal Status of Kerala: Politics and Economics

“This is in addition to the fact that the poor performance of many public services can have spillover effects throughout the state’s economy,” he said.

When considering non-strategic PSEs for disinvestment, privatization or closure, the livelihoods of employees should be ensured, the White Paper says. The government should also tap into the productive potential of land and other assets held by these entities, she said.

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The white paper noted that loss-making PSEs are a permanent drain on the treasury and a burden on the economy. The cumulative loss of all PSEs rose from ₹31,517.1 crore in 2021 to ₹72,851.2 crore in 2024-25, the document said.

“In this context, the committee recommends that basic public services continue to be available and accessible to the poorer sections of society. However, social responsibility should not be used to mask operational inefficiency or financial mismanagement. The starting point is to transform the system from production-based subsidies to consumption-based subsidies,” the document states.

Published – 04 Jun 2026 14:20 IST