Air India’s Privatisation Tough Without Some Debt Writeoff: Arvind Panagariya
The airline is paying a significant sum as interest payment, which is unsustainable for the government, Panagariya added.
Any attempt to privatise troubled state-owned Air India must be preceded by the government writing off at least a part of the the airline’s debt, Arvind Panagariya, the vice-chairman of government think tank NITI Aayog told reporters on Friday.
The airline is paying a significant sum as interest payment, which is unsustainable for the government, Panagariya added.
Right now, we are considering sale of Air India...airline has a large debt of over Rs 50,000 crore that attracts more than Rs 4,000 crore in interest payments and there is a large net loss. This is the issue.Arvind Panagariya, Vice-Chairman, NITI Aayog
A decision needs to be taken on the fate of its real estate and other non-core assets before privatising the airline, according to the NITI Aayog head. If the government decides to take the privatisation route, it needs to take a call on whether the bid will be open to national buyers or international buyers and whether it will maintain some stake in the airline.
In a recent report to the Civil Aviation Ministry, the NITI Aayog has recommended strategic disinvestment from the loss-making Air India, by which government control would be transferred to a private owner. The airline is saddled with a debt of Rs 50,000 crore and is surviving on a taxpayer bailout.
The options include asking the potential buyer to absorb loans of about Rs 20,000 crore linked to aircraft purchases and disposing of the carrier’s real-estate and other non-core assets before the sale, Bloomberg reported citing people who asked not to be identified as the discussions are private.
Strategic Sales To Pick Up Pace
Strategic divestments in state-owned companies, which has moved slower than expected, is expected to pick up pace, Panagariya said.
Strategic stake sale refers to divestments where government will bring down its holding to 50 percent.
Stake sales in about 20 public sector companies have been approved by the Union Cabinet and the Department of Investments and Public Asset Management is working on it will now take a call to take these divestments forward, Panagariya said. The government is considering reducing its stake in all these 20 companies below 51 percent.
In the previous financial year, the government had lowered the budgeted target of strategic stake sale to Rs 5,500 crore from Rs 20,500 crore.
