With an urgent need to strengthen Air India and develop aviation infrastructure across the country , the Civil Aviation Ministry is understood to have sought an allocation of Rs 3,500 crore in the upcoming budget.
This would be in addition to Rs 5,000 crore due from the current year, comprising Rs 4,600 as equity infusion and Rs 400 crore as the interest to be paid on bonds worth Rs 7,400 crore issued this year to banks and financial institutions that have lent money to the national carrier, official sources said.
The government could not give Air India the entire money committed for this year and "we hope they should be able to give it next year", one of the sources said.
During the remaining part of this financial year, Air India expects the government to release Rs 2,000 crore within March 31 as part of the turnaround and restructuring plans, and announced by Finance Minister P Chidambaram in Parliament during the last Winter Session.
Air India was to get infusion of Rs 10,600 crore in the current fiscal but received only Rs 6,000 crore. Last August, the Cabinet Committee on Economic Affairs had approved an equity infusion of Rs 1,200 crore in it.
The Ministry is also seeking Rs 200 crore for the Airports Authority of India and Rs 80 crore for the proposed National Aviation University that would impart training to pilots and air traffic controllers, apart from conducting other related courses.
As part of the turnaround plan cleared by the Cabinet, Air India is to get an equity infusion of over Rs 30,000 crore in tranches over a period of nine years starting 2012-13.
The airline has got its short-term debt of Rs 18,000 crore restructured by converting 60 per cent into long-term loans and issue the bonds with sovereign guarantee to banks and financial bodies for the remaining portion.
The national carrier's losses have mounted from Rs 5,548.26 crore in 2008-09, Rs 5,552.44 crore in 2009-10, Rs 6,865.17 crore in 2010-11 to Rs 7,853 crore in 2011-12.
However in the past few months, it has seen some positive results in terms of positive cash flow due to cost-cutting measures.