Amid the dilemma over spending Rs 50,000 crore on health, education or airline, the government has tasked NITI Aayog to devise a road map for ailing Air India, which may include recommendation for a strategic sale.
The latest push to set the house in order in the beleaguered state carrier has been spearheaded from the top.
Sources said the NITI Aayog is looking at various options and will submit its recommendations in the next few weeks after which the government will take a final call on the way forward.
This is the most serious effort being launched by the Modi government to tackle the mess in Air India. The then Vajpayee government had jump-started efforts to sell a stake in Air India and the then disinvestment minister Arun Shourie had promised to push ahead with a strategic sale even if one bidder was in the fray. But ultimately, the plans fell through and Air India continued as a state-run entity.
“Why should we continue to put thousands of crores in Air India when we can utilise the money for several social sector projects,“ said an official, who did not wish to be identified. Estimates suggested that the airline has liabilities of over Rs 52,000 crore, with the interest burden alone esti mated at Rs 4,000 crore annually. While Rs 25,000 crore has been pumped in over the last five years, a similar amount has been committed till 2032 but still Air India will have an annual cash deficit of Rs 3,000 crore.
Alarge part of the blame is on the way the national carrier was operated during 200507 when an aircraft acquisition plan of Rs 50,000 crore was cleared for an airline with a turnover of around Rs 15,000 crore, putting the national carrier under a severe debt burden, which it is finding tough to service. Officials have also blamed the Air India-Indian Airlines merger for the current mess.
But the government is now finding it tough to sustain the ailing airline given its commitment to fiscal consolidation and the focus having shifted to welfare, for which it needs to spend more on health and education.
Air India has loans of Rs 48,400 crore -working capital and term loans of Rs 22,000 crore, aircraft-related debt of Rs 19,000 crore, and Rs 7,400 crore that it had raised via non-convertible debentures (NCDs).
Air India has been trying to get lenders to cut the interest rate on loans of Rs 10,500 crore, on which it pays 10.1%.The debt servicing alone comes to about Rs 4,000 crore per annum for the airline.
