At last, govt se­ri­ous about pri­vatis­ing AI?

The of­fload­ing of 76 per cent would re­duce the gov­ern­ment’s share­hold­ing to less than 25 per cent and is a com­mend­able mea­sure of the gov­ern­ment’s se­ri­ous­ness

The Asian Age - - Edit -

The gov­ern­ment’s in­vi­ta­tion for ex­pres­sion of in­ter­est ( EOI) from prospec­tive buy­ers of Air In­dia is one of the most de­ci­sive doc­u­ments is­sued by any gov­ern­ment for dis­in­vest­ment of its stake in the hap­less na­tional car­rier. The of­fload­ing of 76 per cent would re­duce the gov­ern­ment’s share­hold­ing to less than 25 per cent and is a com­mend­able mea­sure of the gov­ern­ment’s se­ri­ous­ness. A share­hold­ing of 25 per cent would have given the gov­ern­ment rep­re­sen­ta­tion on the board and led to ac­cu­sa­tions that it was in­ter­fer­ing in its day- to- day work­ing. With its stake be­low 25 per cent, the gov­ern­ment is sig­nalling its as­sur­ance to prospec­tive buy­ers that there will be no in­ter­fer­ence. The air­line can now be run pro­fes­sion­ally and will have the where­withal to com­pete with the best world­wide. The suc­cess­ful buyer will be an­swer­able to its share­hold­ers for the air­line’s per­for­mance.

The stip­u­la­tion that the buyer must have a net worth of ` 5,000 crores will take care of this. The sale will also boost the gov­ern­ment’s fi­nances as it had al­ready poured in ` 23,993 crores of tax­payer funds out of the ` 30,231 crores needed for the turn­around plan. This money, as fi­nance min­is­ter Arun Jait­ley noted, will al­low the gov­ern­ment to un­der­take its com­mit­ments in sec­tors like health and ed­u­ca­tion that have so far been over­looked, de­spite the new uni­ver­sal health scheme.

Will this make Air In­dia great again? If it does, the gov­ern­ment stands to ben­e­fit as it could mon­e­tise the rest of its holding and use the pro­ceeds to re­duce its losses and pro­vide for pay­ment of staff. The buyer, un­der the EOI, has to take over the air­line’s debt and li­a­bil­i­ties that come to a huge ` 33,392 crores or $ 5.13 bil­lion. In­ter­est­ingly, if the buyer is a listed prof­itable en­tity, these losses could re­duce its outgo. The gov­ern­ment has done well to se­cure the in­ter­ests of em­ploy­ees as the new owner can’t get rid of them for a year. It has also wisely taken on the re­spon­si­bil­ity of pay­ing staff ar­rears, that comes to ` 1,298 crores. Air In­dia has 11,214 per­ma­nent em­ploy­ees, of a to­tal of 24,823 em­ploy­ees.

This hope­fully brings to near clo­sure the pri­vati­sa­tion process mooted way back in 2000 un­der the ear­lier NDA gov­ern­ment headed by Atal Be­hari Va­j­payee. Then dis­in­vest­ment min­is­ter Arun Shourie had pri­va­tised 25- odd cor­po­ra­tions, in­clud­ing ho­tels, but Air In­dia was a po­lit­i­cal hot potato. It was an era when a na­tional car­rier was a coun­try’s pride, but that era has passed, with new air­lines mush­room­ing. Around 2004- 05, Air In­dia was nearly killed in favour of a pri­vate air­line, and de­prived of many prof­itable park­ing slots abroad, be­sides be­ing bur­dened with a huge num­ber of air­craft it didn’t need. One should also note the air­line has as­sets of ` 52,000 crores, both tan­gi­ble and in­tan­gi­ble, and en­vi­able slots both at home and abroad.

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