A denial from the government was quick to arrive after a news agency reported on Wednesday that the administration is considering selling a 49% stake in debt-laden Air India. There is definitely merit in pursuing such a proposal; disinvestment in Air India is long overdue. And with the sector’s prospects looking better due to lower crude oil prices, the chances of getting a better valuation are also high. In fact, the government would do well to sell a controlling stake in the airline for reasons that are well understood.
Private companies now have a vibrant presence in India’s aviation sector. The state-owned airline is losing market share—competition will only intensify in times to come. Moreover, the most pressing issue is of the fiscal cost associated with running such a company and the market distortion that it creates. Coming to that, the merits of the government moving out of business are not limited to the aviation sector.