Thursday, June 29, 2017

PM Modi wants to sell debt-laden Air India, but where is the right buyer?

While the positive impact of GST on the economy is still being debated, the Narendra Modi-led NDA government has taken its first step to divest stake in the loss-making national carrier Air India. The finance minister Arun Jaitley announced that the cabinet has given in-principle approval for disinvestment in AI, and a group of ministers (GoM) will be formed to look into the divestment process.
If the government succeeds in selling AI this time, the third such attempt in the past two decades, it would definitely reaffirm the current government's commitment of ensuring "minimum government, maximum governance". In his 2014 visit to the US, PM Modi had said that "it is not the government's business to run a business." With AI disinvestment, he seems to be walking the talk.
The cabinet approval is the initial step in what seems like a process lasting several months. According to rough estimates, the deal is likely to be concluded by the end of the current financial year. Given the dismal performance of the airline, the government might have to throw its weight around to conclude the deal. So far, no major corporate group has evinced interest in buying AI. The government though has reportedly held informal meeting with Tata Group chairman N. Chandrasekaran to sell majority stake.
Since the government's intent is clear, getting regulatory clearances - and reaching consensus within the group members - will not be an issue. Thankfully, the disinvestment would not require approval from parliament which could well have been a tardy process. In 1994, Air Corporation Act was repealed that ended the monopoly of national air corporations and opened the sector for private carriers.
29/06/17 Manu Kaushik/Business Today