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Govt ready to inject Rs 980 crore to keep ailing Air India alive

The government last month was forced to shelve its plan to sell a majority stake in the beleaguered airline due to lack of interest from bidders, in the latest setback in its efforts to rescue the loss-making carrier that has been kept afloat for years using taxpayer funds.

Mail Today Bureau        Last Updated: August 1, 2018  | 08:06 IST
Govt ready to inject Rs 980 crore to keep ailing Air India alive

The government on Tuesday sought the approval of parliament to inject Rs 980 crore in ailing national carrier Air India during the current financial year, after attempts to find a buyer for its 76 per cent stake in the airline failed to take off. The government has "sought funds for infusion of equity in Air India under its turnaround plan," a statement tabled in the Lok Sabha said.

To fund the capital infusion in Air India and other sectors, the government has sought parliament's approval for an additional net spending of Rs 5,951 crore, on top of the budgeted Rs 24.42 lakh crore for 2018-19.

The government last month was forced to shelve its plan to sell a majority stake in the beleaguered airline due to lack of interest from bidders, in the latest setback in its efforts to rescue the loss-making carrier that has been kept afloat for years using taxpayer funds.

The sale was also key to Prime Minister Narendra Modi's plans to help keep the fiscal deficit at 3.3 per cent of GDP, a goal already under pressure from giveaways to farmers and other welfare benefits ahead of the 2019 Lok Sabha elections.

An Air India source told Reuters on Monday that it had sought Rs 2,121 crore of additional equity from the government for 2018-19 to make pending payments to its vendors. The airline is also reeling under a crushing debt burden of around Rs 48,781 crore as of March 31, 2017.

Air India, which employs some 27,000 staff, had in June this year sought proposals for short-term loans worth Rs 1,000 crore to meet urgent working capital requirements. It also borrowed Rs 6,250 crore from various banks between September last year and January this year for immediate requirements and other needs.

Recently, Air India asked the government to restore the equity infusion after its strategic disinvestment bid failed to take off in May.

In April 2012, Congress-led UPA regime had approved a turnaround plan as well as a financial restructuring plan for Air India. Under the turnaround plan, Air India is to receive a total equity infusion worth Rs 30,231 crore up to 2021.

So far, the airline has received Rs 27,195.21 crore worth equity infusion.

The carrier had been receiving about Rs 3,000-4,000 crore equity infusion on an average per fiscal from the government till 2013-14. However, after that the amount was gradually reduced.

For 2018-19, the airline has been allocated Rs 650 crore.

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