Kolkata: At a time when the West Bengal government is trying to reduce non-Plan expenditure and offering around 8.6% interest—the highest among all states—to borrow from the market, the state’s transport department has refused to restructure five ailing companies run by it to avoid job cuts.
In the year that ended in March, the state government provided Rs317 crore in budgetary support to the five— Calcutta State Transport Corporation, North Bengal State Transport Corporation, South Bengal State Transport Corporation, Surface Transport Corpation and Calcutta Tramways Co. Their total audited loss in 2006-07, according to the comptroller and auditor general (CAG), was Rs236 crore.
British agency Department for International Development, or DFID, has been providing financial support to restructure the state’s loss-making corporations. So far, 34 state-owned companies have been restructured, and the government claims it led to savings of around Rs65 crore in 2007-08.
Slow motion: A tram at Kolkata’s Park Circus. Calcutta Tramways is one of the five state-run companies that have refused DFID funds.(Photo: Indranil Bhowmik/Mint)
But the five ailing corporations under the administrative control of the transport department, headed by minister Subhas Chakraborty, have said no to DFID-funded restructuring because they fear the British agency will force them to cut jobs, according to a government official who did not wish to be named.
Asked why he refused to restructure the corporations, Chakraborty said: “I don’t think restructuring would solve the problems (of these corporations). I was never in favour of this DFID-funded exercise.”
But an official in his department said: “The minister was worried that DFID would have forced the government to cut jobs through ERS (early retirement scheme)… that would have been unavoidable.” These companies employ around 23,000 people in all.
A spokesperson for DFID said, “The West Bengal government has indicated to us that its transport corporations would not be restructured , but we are happy to work with the state.” DFID, which provided Rs208 crore till last year for the first phase of restructuring, proposes to spend Rs192 crore on the second.
The refusal to restructure means the government would have to continue to spend more than Rs300 crore each year to keep the companies running. “We have to seriously consider ways of improving internal efficiencies of these corporations,” West Bengal’s finance minister Asim Dasgupta said, adding that a committee comprising officials of the transport, finance and public enterprise departments has been formed to review their performance every quarter.
Besides making the companies more efficient, the government has been considering selling surplus land owned by some of them. But most of them are not keen to part with their assets.
Calcutta Tramways, which has accummulated losses of more than Rs500 crore and employs around 7,000 people, is a case in point. It owns large tracts of land across Kolkata, but has never tried to assess its value. “We have never thought of doing a survey to understand the exact size of our land bank, but we might in future,” said Pradip Chatterjee, managing director of the company.
The finance department, however, is considering a proposal to lease out a little more than 4 acres at the company’s terminal at Tollygunge in south Kolkata. The transport department has agreed to the plan and, according to its principal secretary Sumantra Chaudhuri, the plot is expected to fetch Rs70-100crore.
Aveek Datta contributed to this story.