"After an era of, say, five years of structurally reformed existence, if a public enterprise fails to demonstrate its sustainability and cannot get out of the zone of chronic losses, such an enterprise should be sold off - at whatever price it can sell," the Commission said.

However, the PSUs should be first given the same benefits of autonomy and freedom as the private sector thus freeing them from the shackles of the ministries from which they originally emerged, it said in its report.

"The management of PSUs has to be autonomous, professional, accountable, transparent and durable for a good length of time. Such reforms should be immediately launched," it said stressing on extensive restructuring in the second phase of structural reforms.

Those PSUs which were able to sustain themselves and make profits in the new environment could be a major source of resource generation and budgetary support and help cut down the revenue deficits of the Central and state governments, the EFC said.

For ailing PSUs located on prime land or owning real estates, their sale value could be substantial and ploughed back into the expansion of other units, it suggested.

Accepting that rationalisation of the workforce in PSUs had become a necessity for the survival of the units, the Commission said it was important to reduce the surplus workforce through early retirement with adequate compensation, golden handshakes and re-employment of young workers after retraining.

On state electricity boards (SEBs) and state road transport undertakings (SRTU), the Commission said most of these were chronic drain on state budgets.

While unbundling of SEBs with or without privatisation were being carried out by many states, the determination of proper tariffs reflecting cots and keeping subsidisation and cross-subsidisation implicit in the tariff structure should be rationalised and kept at minimum levels, it said.

"State level tariff commissions need to look at the issue of revision of electricity tariff structure keeping in perspective the interest of different categories of consumers, changes in cost structure, functional implications for sebs, as also for the state governments," it said.For STRUs, it suggested that tariff revisions in line with input costs, elimination of concessions, suitable mix of profitable with non-profitable routes and lowering of staff-bus ratio were essential.