New Delhi: Two entries pertaining to the civil aviation sector in the first batch of supplementary demand for grants presented to Parliament on July 31 deserve closer scrutiny by those desirous of understanding how the Narendra Modi government treats its public sector undertakings or PSUs. The first entry envisages provision of additional funds of Rs 800 crore to Air India as equity infusion and the second entry is for an amount of Rs 100 crore allocated to clear pending claims of Air India towards maintenance of the prime minister's aircraft. Both the demands will be met through additional expenditure, and not by any savings. The significance of the two entries lies not in the amount of money, but in the political context and the economic policy implications of the manner in which the taxpayer's money is being spent.
Why Air India, a PSU airline, should need equity infusion this year may well defy ordinary business logic at a time when falling crude oil prices are making airline operations profitable globally and the airline itself is not on any significant capacity expansion spree requiring extra funds of this nature. The logic becomes even more questionable when one realises that the Budget for 2015-16 had already provided Rs 2,500 crore for equity infusion into the loss-making Air India. It would appear, therefore, that so weak is Air India's financial situation that this amount is considered inadequate, prompting the government to raise capital infusion by Rs 800 crore.
09/08/15 A K Bhattacharya/Business Standard
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Why Air India, a PSU airline, should need equity infusion this year may well defy ordinary business logic at a time when falling crude oil prices are making airline operations profitable globally and the airline itself is not on any significant capacity expansion spree requiring extra funds of this nature. The logic becomes even more questionable when one realises that the Budget for 2015-16 had already provided Rs 2,500 crore for equity infusion into the loss-making Air India. It would appear, therefore, that so weak is Air India's financial situation that this amount is considered inadequate, prompting the government to raise capital infusion by Rs 800 crore.
09/08/15 A K Bhattacharya/Business Standard
