New Delhi: Ailing national carrier Air India, run by National Aviation Co. of India Ltd, is likely to see Rs800 crore of capital infusion by December-end, a group of ministers (GoM) led by finance minister Pranab Mukherjee recommended on Thursday, based on a monthly review of the carrier’s cost-cutting measures.

The matter will require cabinet clearance and covers a portion of the money that will infused as part of a government rescue plan for the cash- strapped airline.

“We are broadly looking at equity infusion linked to its monthly performance parameters and we are only looking at till March," said Praful Patel, minister of civil aviation, after the meeting, according to PTI. “This is not the total equity infusion being looked at for Air India."

Damage control: Civil aviation minister Praful Patel says Rs800 crore is not the total equity infusion being looked at for Air India. Mint

AI has been seeking an equity infusion since last year. Its current equity stands at Rs145 crore. “What it means is, Air India will not die," said a senior government official familiar with the matter who asked not be named.

The grants will, however, be attached to “severe" conditions, said the official cited first.

The GoM was given a presentation on AI’s plans to reduce costs and enhance savings by chairman and managing director Arvind Jadhav and civil aviation secretary M. Madhavan Nambiar. The meeting was also attended by Patel, petroleum minister Murli Deora, home minister P. Chidambaram and deputy chairman of the Planning Commission Montek Singh Ahluwalia.

The government would be “able to finally take a call at the end of March as to what will be the final support which the government will provide," Patel said.

AI will have to do route rationalization, said one of the officials cited above. How the amount is to be allotted also needs to be resolved. That will decide if the cash should be used for development purposes such as paying for aircraft, and not for expenses such as paying salaries. Those modalities will have to be decided by the finance ministry after the final clearance, the official said.

PTI contributed to the story.