New Delhi: The Narendra Modi government appears to be trying hard to sweeten its offer for sale of Air India.
However, irrespective of whatever the government does now, the short window of opportunity that the Modi government had for privatising the state-owned airline is now virtually shut, at least for the next year or so.
Consider this: Even if the terms of sale of Air India are made easier, the deal cannot be closed in the next six months. There are at least three crucial state Assembly elections scheduled to be held before the end of January 2019. Assembly elections for Chhattisgarh, Madhya Pradesh and Rajasthan have to be completed before January 5, 7 and 20, respectively. And then, there are the general elections to be held in May 2019.
The stakes for the Modi government in these elections will be very high. The Bharatiya Janata Party (BJP) will be fighting the Assembly polls as an incumbent in all the three states. And for the Lok Sabha, Modi will be fighting what now looks like a combined Opposition.
Can the Modi government run the risk of the sale of Air India becoming a political issue in the run-up to these elections?
Remember that the Atal Bihari Vajpayee government faced a major flak from the Opposition political parties in the 2004 elections on the question of privatisation. It was accused of having sold the family silver, as the Vajpayee government sold several high-profile public-sector undertakings like the IPCL, VSNL, Hindustan Zinc and even Maruti Udyog. In the campaigning prior to the 2004 elections, the BJP did face many uncomfortable questions from Opposition parties and voters over its privatisation policy.
In contrast, the Modi government was initially ambivalent about privatisation. It did include the provision of strategic sale of government equity in public-sector undertakings (another name for privatisation) in its annual Budgets. But its track record on such sales was poor, even though it substantially increased its proceeds from disinvestment of minority stakes in PSUs.
13/06/18 A K Bhattacharya/Business Standard
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However, irrespective of whatever the government does now, the short window of opportunity that the Modi government had for privatising the state-owned airline is now virtually shut, at least for the next year or so.
Consider this: Even if the terms of sale of Air India are made easier, the deal cannot be closed in the next six months. There are at least three crucial state Assembly elections scheduled to be held before the end of January 2019. Assembly elections for Chhattisgarh, Madhya Pradesh and Rajasthan have to be completed before January 5, 7 and 20, respectively. And then, there are the general elections to be held in May 2019.
The stakes for the Modi government in these elections will be very high. The Bharatiya Janata Party (BJP) will be fighting the Assembly polls as an incumbent in all the three states. And for the Lok Sabha, Modi will be fighting what now looks like a combined Opposition.
Can the Modi government run the risk of the sale of Air India becoming a political issue in the run-up to these elections?
Remember that the Atal Bihari Vajpayee government faced a major flak from the Opposition political parties in the 2004 elections on the question of privatisation. It was accused of having sold the family silver, as the Vajpayee government sold several high-profile public-sector undertakings like the IPCL, VSNL, Hindustan Zinc and even Maruti Udyog. In the campaigning prior to the 2004 elections, the BJP did face many uncomfortable questions from Opposition parties and voters over its privatisation policy.
In contrast, the Modi government was initially ambivalent about privatisation. It did include the provision of strategic sale of government equity in public-sector undertakings (another name for privatisation) in its annual Budgets. But its track record on such sales was poor, even though it substantially increased its proceeds from disinvestment of minority stakes in PSUs.
13/06/18 A K Bhattacharya/Business Standard
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