Thursday, June 01, 2017

Air India debt trap: Here is a more workable idea; govt need not resort to huge write-off

New Delhi: The Narendra Modi government is mulling a selloff of Air India since it has been unable to find a solution to the airline’s mounting debt pile. This much has been clear from various statements of concerned government officials over the last few days, each of whom has expressed his helplessness in dealing with the debt problem. A Business Standardreport shows how the Modi administration has been aggressively pumping money to resuscitate Air India’s fortunes since it came to power. From August 2014 till March 2017, Rs 16,822 crore have been infused into Air India.

With no revival in sight, the government perhaps is now banking on an investor to bail it out of the Air India mess. While officials have admitted that the debt conundrum has no solution, no one has come out with the modalities of this proposed sale, a rather complicated and difficult business given the over Rs 50,000 crore debt and about Rs 23,000 crore of accumulated losses on Air India’s books. Media reports today speak about a Niti Aayog proposal where the government would like any prospective buyer to shoulder half the debt burden while it writes off the remaining half, so that the white elephant called Air India is finally out of its hair. But this picture may not be entirely true and the government could actually book very little loss if it goes about the sale sensibly.
31/05/17 Sindhu Bhattacharya/First Post

0 Comments: