In a final goodbye of sorts to Air India, finance minister Nirmala Sitharaman announced the allocation of Rs 51,000 crore towards clearing Air India’s dues to various banks.
This assumes significance since after the sale of Air India to the Tata group, almost Rs 46,000 crore of the airline’s Rs 61,000 crore debt was supposed to be paid back by the government. The Tata group was saddled with only Rs 15,000 crore of the airline’s humongous debt.
While the Tata group had received several offers from various public sector banks to service its debts, there were questions over how the central government would mobilise resources to service its obligation. The debts and select assets of the erstwhile national airline was transferred to a special purpose vehicle named Air India Asset Holding Company (AIAHL).
While the Tatas were reportedly offered a loan on soft terms by SBI and a couple of other public sector banks to service its part of the debts, the central government was primarily relying on monetizing Air India’s assets which were not transferred to the Tatas to repay its obligations.
With Sitharaman announcing an allocation of Rs 51,000 crore to clear Air India’s debt in her budget speech, the government finally seems to have shook the monkey off its back.
The Tata group had taken over Air India’s management on January 27, 2022 barely a week before the budget. The government would be receiving only Rs 2700 crore from the Tatas for selling the airline along with its hundreds of aircraft and other assets.
In her last budget, Sitharam had pegged the government’s disinvestment targets at Rs 1.75 trillion. However, it managed to get just about Rs 9,330 crore. Air India was the most significant disinvestment in 2021-22.
