New Delhi The government’s auditor, Comptroller and Auditor General (CAG), has taken to task the erstwhile state-owned domestic carrier, Indian Airlines, for allegedly violating decisions of the Empowered Group of Ministers (EGoM) that negotiated the purchase of 43 aircraft with French aircraft manufacturer Airbus in 2005, causing an “avoidable expenditure and (or) loss” of Rs 4,668.07 crore. Praful Patel was the civil aviation minister then.
In its report that is likely to be placed in Parliament in the current session, the auditor has recommended future aircraft acquisition through auctions “on the line of auction of 3G spectrum for telecom operators”.
It also said acquisitions should be linked to “reasonable debt-equity ratio so that borrowings are kept within limits”. Indian Airlines had a paid-up capital of Rs 107 crore and reserves of almost Rs 566 crore as on March 31, 2005. While the CAG states that the cost of acquisition was Rs 8,527.19 crore, the government had put it at Rs 9,890 crore.
The CAG’s final report lists what it calls several anomalies.
The aircraft purchase deal negotiated by the P Chidambaram-chaired EGoM, and subsequently cleared by the Cabinet Committee on Economic Affairs, required Airbus to set up a $75-million Pilot Training Centre and a $100-million Maintenance, Repair and Overhaul (MRO) facility. But the airline did not put these riders in its agreement with the French aircraft manufacturer, the CAG pointed out.
03/03/11 Smita Aggarwal/Express India
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