If and when Congress comes to power, they may also have to get rid of the bleeding AI.
While it is heartening to note that the Narendra Modi government has allowed 49 per cent foreign direct investment (FDI) in civil aviation, thus paving the path for Air India’s privatization, the same cannot be said about the reaction of the main Opposition party, the Congress.
Typically, the Congress has opposed the move. Senior Congress leader Anand Sharma said, “The government should be careful in allowing FDI in Air India, which is a national carrier. It should not do anything in stealth.”
Now, this ‘national carrier’ term is amusing. Who carries whom? It is actually the nation—through the taxpayer—that carries the sick airline which should anyway have been sold off or shut down by the earlier governments.
Sharma said the carrier had assets worth lakhs of crores of rupees and had a large number of route permits as a result of bilateral agreements, and these would be greatly affected by the government’s decision, PTI reported. The former Union commerce minister ought to know that the airline is a company, and a company has assets as well as liabilities. What matters is the net worth of the company—that is, the difference between assets and liabilities—and AI’s net worth has been eroded. Since 2013-14, when its loss was Rs 6,279.6 crore, the company’s annual financial statement has not been put on its website. Its net debt is in the region of Rs 54,000 crore. It is a drain on the exchequer.
As per the present policy, foreign airlines are allowed to invest under the government approval.
Yet, the Congress is raking up xenophobic fears in resisting its sale. “The government should clarify whether the ownership and control of Air India would be handed over to foreign players and whether its assets would also be handed over, as well as on the monetization of routes,” Sharma said.
Even if the government was not committed to the ownership of AI by Indian nationals, heavens would not fall. And, by the way, what is this ‘national control’? In practice, it translates into the airline, like other public sector companies and banks, being the fiefdom of politicians and bureaucrats, the folks who have made it sick in the first place. All attempts made to revive it has failed; in the process, thousands of crores of rupees have been wasted. The only way out is privatization. Thankfully, the government has chosen the right path.
As per the present policy, foreign airlines are allowed to invest under the government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 percent of their paid-up capital, says an official press release. “However, this provision was presently not applicable to Air India, thereby implying that foreign airlines could not invest in Air India. It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 percent under approval route in Air India.”
Ideally, the Congress should now support AI privatization, or at least not oppose it.
The government has anyway made it clear that “substantial ownership and effective control of Air India shall continue to be vested in Indian national[s].” Also, the official release said, “foreign investment(s) in Air India, including that of foreign Airline(s), shall not exceed 49 percent either directly or indirectly.”
This takes care of the grand old party’s objections. Ideally, the Congress should now support AI privatization, or at least not oppose it. But, unfortunately, in our country, the Opposition also opposes the government for the heck of it. For instance, the Bharatiya Janata Party resisted the previous Congress-led regime’s move to implement the goods & services tax. Had it not blocked GST, the problems faced by its government would not have been receiving flak in the execution of this change.
The GOP should also consider the fact the AI sale is a dirty job. If and when they come to power, they may also have to get rid of the bleeding airline. It’s better, from their own perspective, that the BJP government should do the job.
1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.