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Union Finance Ministry has directed all central government ministries and departments to clear their pending dues to Air India immediately. The central government officials have been asked to buy Air India tickets in cash till further notice. The order was disseminated after Air India ended its credit facility to the government following its disinvestment.

In a letter to all ministries and departments under Government of India referred to an earlier office memorandum where officials were asked to travel only with Air India if the cost is borne by the Centre. This included leave travel concessions (LTC).

“Recently, the Government of India has decided to disinvest Air India, the process of disinvestment of Air India and Air India Express is ongoing. Air India has stopped extending credit facility on account of purchase of air tickets. Therefore all ministries/departments are directed to clear Air India's dues immediately. Air tickets from Air India may be purchased in cash till further instructions," read an office memorandum from Department of Expenditure under Ministry of Finance.

Also Read: Air India pilots await clarity on salary ahead of takeover

The Finance Ministry noted that ministries and departments should bring these developments to the notice of their subordinate offices, institutes, etc. that are under their administrative control, for compliance.

Earlier this week, central government signed the share purchase agreement with Tata Sons for the sale of national carrier Air India for 18,000 crore. Earlier this month, the government had accepted an offer by Talace Pvt Ltd, a unit of the holding company of the salt-to-software conglomerate, to pay 2,700 crore cash and take over 15,300 crore of the airline's debt.

Following that, on October 11 a Letter of Intenet (LoI) was issued to the Tata Group confirming the government's willingness to sell its 100 per cent stake in the airline.

Also Read: What the Air India privatization means for India

Now, various regulatory clearances, including from the Competition Commission of India (CCI), would have to be taken by Tata Sons before the actual handover of the airline takes place by December-end.

The government is divesting its 100 per cent ownership of Air India and Air India Express along with its 50 per cent stake in ground-handling company AISATS.

As on August 31, Air India had a total debt of 61,562 crore. As part of the deal, 75 per cent of this debt or 46,262 crore will be transferred to a special purpose vehicle AIAHL before handing over the loss-making airline to the Tata Group.

Tatas would not get to retain non-core assets such as the Vasant Vihar housing colony of Air India, Air India Building at Nariman Point, Mumbai, and Air India Building in New Delhi.

Of the 141 Air India aircraft that Tatas would get, 42 are leased planes while the remaining 99 are owned.

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