The Centre’s decision allowing individual airline companies to go in for overseas borrowing has come as a much needed shot in the arm for the aviation sector caught in rough weather, specially at a time when almost all domestic carriers, barring one, are in a deep financial mess.
The budget proposal to allow aviation sector to raise up to US$1 billion through external commercial borrowing (ECB) route for their capital requirements is likely to be implemented shortly. However, the ECB window would be available for one year only.
Experts say this brings aviation sector at par with other infrastructure sectors like power, which has been allowed in the recent past to raise their own working capital to bail them out whenever in trouble without depending much on the government fund.
They are also of the view that the current policy decision of allowing external commercial borrowing is the much needed dose, especially for debt-ridden private carriers like Kingfisher Airlines to raise working capital from overseas and the public sector behemoth Air India, which required monetary infusion on regular intervals to keep it going in the recent times.
So far, airlines were allowed to raise foreign capital only for import of capital equipment like aircraft. Incidentally, the Department of Industrial Policy and Promotion (DIPP) has moved a Cabinet note in this regard.
22/04/12 Anupama Singh/Deccan Herald
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