Friday, July 14, 2017

Air India privatisation: Why Maharaja should not be sold off

Sunil Jain, on July 10, 2017, wrote a profound piece on the proposed Air India sell off in this newspaper. He began by asking a question is Air India worth Rs 5 lakh crore as I had indicatively valued it in my column ( for The Indian Express or, as some others have suggested, its worth is only Rs 1?
Before I deal with the valuation query there are certain other questions that the “morticians” of Air India need to answer. First, what public interest is served by privatising public assets? The global experience of the past 27 years is that it only creates oligarchs and oligarchies.
Second, where is the empirical evidence that private sector can run a better airline. For every one private airline that has been successful since the skies in India opened up in 1992, two have gone belly up. Even the prima donna of private airlines, Jet Airways, is a not much of an experience to write home about. Let me relate a recent experience. On the morning of July 11, I was accompanying the combined opposition candidate for president, Meira Kumar, to Jaipur for campaign. As the web-check-in had failed, I was standing in the boarding queue to collect my economy-class boarding pass, since that is the only configuration ATRs have. The check-in staff was obtuse, rude and arrogant in that order. Their behaviour could make any government ‘babu’ blush with shame.
Third, if public-public partnerships can run utilities successfully across the country, the Delhi Metro Railway Corporation (DMRC) that is jointly owned by the Union government and the Delhi government being a classical example, is the “sell out” of Air India the only solution to its problems? Why can not other ways like the GSTN (Goods and Service Tax Model Network) model not be explored whereby public institutional investors hold 50% of the equity and the remaining 50% is distributed among the general public and employees of Air India? The GSTN equity structure is as follows: Union government 24.5%, state governments 24.5%, HDFC 10%, HDFC Bank 10%, ICICI Bank 10%, NSE Strategic Investment Co 10% and LIC Housing Finance Ltd 11%?
Fourth, if crony capitalists, carpetbaggers and scamsters who are in debt to public sector banks to the tune of Rs 6 lakh crore can routinely have their debts restructured over and over again, why can’t the government bite the bullet and retire Air India’s debt and give it a fresh start?
14/07/17 Manish Tewari/Financial Express