A revamp of Kerala’s loss-making public sector enterprises (PSE), with a suggestion that ‘non-strategic’ PSEs may be considered for “disinvestment, privatisation, or closure in cases where they are potentially non-viable,” 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’ tabled in the State Legislative Assembly on Thursday (June 4, 2026), also recommends a merger of the Kerala State Beverages Corporation (Bevco) and the Kerala Civil Supplies Corporation (Supplyco) into a single corporation “with separate divisions for liquor distribution and civil supplies/provisions.”

The White Paper noted that it is imperative that the Kerala State Electricity Board (KSEB), the Kerala State Transport Corporation (KSRTC), and the Kerala Water Authority (KWA) are reformed in a manner that they cease to be a drain on the exchequer. The committee headed by former Union Cabinet Secretary K.M. Chandrasekhar observed that these three utilities accounted for the overwhelming share of the aggregate losses of PSEs in Kerala. The persistent losses of these PSEs have led to the erosion of the net worth of these enterprises and continuous cash loss, forcing many of them to depend on budgetary resources to continue their operation.

“This is in addition to the fact that poor performance of many public utilities can have spillover effects throughout the State economy,” it said.

When considering non-strategic PSEs for disinvestment, privatisation, or closure, the livelihood of the employees should be safeguarded, the White Paper said. The government should also tap the productive potential of the land and other assets held by these entities, it said.

Drain on exchequer

The White Paper noted that loss-making PSEs persistently remain a drain on the exchequer, straining the economy. The accumulated loss of all PSEs rose from ₹31,517.1 crore in 2021 to ₹72,851.2 crore in 2024-25, the document noted.

“In this context, the committee recommends that essential public utilities must continue to remain accessible and affordable to poorer sections of society. However, social responsibilities should not be used to mask operational inefficiencies or financial mismanagement. A way out is to transform the system from production-based subsidies to consumption-based subsidies,” the document noted.