Wednesday, July 26, 2017

CAG seeks details of plan to float trust for UDAN

New Delhi: The Comptroller and Auditor General (CAG) has sought details of the aviation ministry’s plan to create a trust to fund the government’s regional connectivity scheme (RCS), which was launched three months ago.
“They wanted to know about the composition of the trust and other details about the trust, which has been created to keep it out of the tax ambit,” said an official who did not want to be named. “A trust ensures that there is no tax element in the subsidy payments made to airlines.
 CAG officials visited the aviation ministry to make their inquiries, according to three people with knowledge of the matter. The government offers subsidies under RCS to airlines for connecting unserved and underserved airports at a fare of Rs 2,500 per hour of flight. The government has created a Regional Connectivity Fund (RCF) that collects money from airlines to pay for the scheme. The subsidy will be paid through a Regional Connectivity Trust (RCT), which is what the CAG is asking about.
The CAG team was informed that the trust is headed by the Airports Authority of India (AAI) chairman and members include others from the agency, said the people cited above. AAI is the nodal body for payment of the RCS subsidy to airlines operating regional flights. When contacted, CAG sources told ET they don’t comment on any audit until it is complete and the report has been submitted. The aviation ministry and AAI didn’t respond to emails seeking comment.
26/07/17 Mihir Mishra/Economic Times