BY FREEZING promotions and putting a moratorium on new recruitments, the Government has sent out the message that it was very keen on its stake sale in badly debt-ridden Air India (AI). Not only that the Government has also relaxed several conditions which it had put last time when it had announced for stake sale. It is very clear from these steps that the Government no longer wants to pump in more money to keep it afloat. Though the Government was equally serious on selling its stake last time as well, the conditions set by it deterred buyers from coming forward.
As a result that attempt had to be aborted and the Government was again required to make financial provisions in the annual budget. But the question remained, how long the Government would be able to sustain the airliner that had turned into a white elephant. It was, therefore, obvious that the Government would have to offer newer concessions to make the deal lucrative and interested to prospective buyers. And not that there were no interested parties to buy the AI. But most of them were scared by the huge burden of debt that amounted to a whopping Rs. 50000 crore. This was one of the most deterrent of the issues that made it nearly impossible for the Government to sell the airliner. It was, therefore, necessary for the Government to spell out with more clarity its take on this huge burden of debt.
Since the Government was keen to get out of this business as quickly as possible and since it had no desire to keep on hand-feeding it any longer, it was incumbent for it to come out with an attractive package. The ban on promotions and new recruitments shows that the Government does not want to add newer burden on the prospective buyer and leave such decisions to the incoming management. The latest decision on the public sector Pawan Hans helicopter service to dilute its stake and offer to buyers with renewed stake sale conditions is another instance of the Government’s desire to involve the private sector in these critical areas. In the case of Pawan Hans as well, the Government has relaxed several norms, including offering voluntary retirement scheme (VRS) to its permanent employees, on disposal of assets, indemnifying of outstanding tax burden on the airlines etc.
Even in case of Pawan Hans the Government had failed to attract in buyers from the private sector last time as the terms and conditions were far from their liking. It had, therefore, become necessary for the Government to come up with new and attractive offers. The Government, in the meanwhile, has to probe the reasons for the country’s premier airline plunging into such a situation where it has become a heavy burden on the exchequer. One of the major reasons for the AI plunging into the current situation has been political interference in its working and mismanagement at political level. Because of wrong policies of the earlier Governments the public sector airliner had lost several of its lucratively paying air routes. Besides the Government’s decision to buy huge number of aircraft also added to its financial burden, an investigation about which is still continuing.
Before the Government once again makes the offer of stake sale it has to ensure that there are minimum of encumbrances of the past so that the new operator is able to take decisions that would help ensure early turn-around in the beleaguered airliner, that of course would include decision making powers for the new management. The ban on new recruitment and moratorium on promotions in the airliner appears to be one step towards that. While formulating the policy for disinvestment in various subsidiaries of the AI, the Government should have fresh look at its civil aviation policy as a whole, so that this promising sector is not constrained by any inhibiting policies.