Wednesday, February 02, 2022

A large chunk of spending: Rs 51,971 cr just to settle Air India debt before sale

New Delhi: Having closed the high-profile disinvestment process of Air India, the government also decided to retire the airline’s debt, which it transferred to a special purpose vehicle. In the Union Budget 2022-23, the government allocated an additional Rs 51,971 crore towards the settlement of outstanding guaranteed liabilities of Air India and its other “sundry commitments”.

This amount has been accounted in the Revised Estimates of the total expenditure in 2021-22.

“As against a total expenditure of Rs 34.83 lakh crore projected in the Budget Estimates 2021-22, the Revised Estimate is Rs 37.70 lakh crore. The Revised Estimate of capital expenditure is Rs 6.03 lakh crore. This includes an amount of Rs 51,971 crore towards settlement of outstanding guaranteed liabilities of Air India and its other sundry commitments,” Finance Minister Nirmala Sitharaman said during the Budget speech.

The Tata Group acquired 100 percent stake in the airline in a deal, which closed on January 27, for Rs 18,000 crore. Of this, Rs 15,300 crore was taken on as debt and Rs 2,700 crore was paid to the Centre in cash. For servicing the high-cost debt that it has taken on with the airline, a consortium led by the State Bank of India has approved a plan to provide long-term debt to the Tata Group.

As per the Revised Estimates of 2021-22, the SPV — AI Asset Holding Ltd — has received Rs 62,057 crore, of which Rs 36,254 crore was infused as equity for repayment of past government-guaranteed borrowings of Air India; Rs 12,357 crore for repayment of borrowings for sale and leaseback rentals for aircraft; and Rs 13,446 crore for repayment of other dues and liabilities.

The huge amount of debt carried by Air India, resulting from years of loss-making operations, was one of the key hindrances in the past disinvestment attempts by the government. During the last divestment process, the government tweaked the bidding conditions to allow potential bidders to place a bid at the enterprise value — meaning they could decide the quantum of debt they would want to take on.

02/02/22 Pranav Mukul/Indian Express

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