Govt can privatize AI or shut it down: Puri2 min read . Updated: 15 Sep 2020, 02:50 PM IST
- With ₹60,000 debt, the choice is between privatisation and closing down the airline, Puri said.
NEW DELHI : The Union government will have to either privatize Air India Ltd or shut it down because of its large debt, civil aviation minister Hardeep Singh Puri said on Tuesday.
The minister, however, said that if the government can, it will continue to run the flag carrier. But, with ₹60,000 crore debt, the choice is between privatization and closing down the airline, Puri told the Rajya Sabha before the passage of the Aircraft Amendment Bill 2020. “We are confident that Air India will be given to a new owner to keep the flag flying high," he said.
Air India has received an equity infusion of ₹30,520.21 crore till date from the government since FY 2011-12, which includes financial support and cash support.
Bloomberg reported on Monday, citing officials, that the government is proposing to drop a condition that the winning bidder for Air India will have to take on $3.3 billion of aircraft debt. It said that a group of bureaucrats has vetted the proposition and, under the new plan, potential buyers will be allowed to bid on the enterprise value and not on the entity value.
“I don’t expect the government to make anything significant from the sale of Air India and the government’s focus is to redirect the funds to other pressing requirements such as health, education and social infrastructure," said Kapil Kaul, South Asia chief executive officer of CAPA-Centre for Aviation, an aviation consultancy.
“Changes (in bid conditions) are based on feedback from potential investors," Kaul said, adding that the government is taking steps in the right direction for successfully privatizing Air India.
Meanwhile, the Rajya Sabha passed the Aircraft (Amendment) Bill 2020, which seeks to convert aviation agencies, such as the Directorate General of Civil Aviation, the Bureau of Civil Aviation Security and the Aircraft Accident Investigation Bureau, into statutory bodies. The bill, which was tabled by Puri in the Upper House, was cleared by the Lok Sabha in March.
Violations of the Act will attract stringent punitive measures. For instance, carrying arms, ammunition and explosives, or other banned substances on board, and developing illegal structures around airports will attract fines of up to ₹1 crore. “Minor amendments in the Act have been carried out by way of addition/ deletion from time to time to meet the varying scenario of Indian and global civil aviation and to keep pace with changing times and developments," ministry said.
Responding to criticism on handing over the Thiruvananthapuram airport to the winning bidder, Adani Enterprises Ltd, Puri said the six airports awarded to the group account for just 9%, while the busiest airports —Delhi and Mumbai—handle 33% of the total traffic in India. “I am making a limited point; we are progressing from a limited number of players in the airport sector, to expanding and opening it out to global entities," Puri said.