Tail wags the dog: The Centre and Air India are dragging each other down

With policy think-tank Niti Aayog tasked with preparing a roadmap for Air India, there is hope that the government will finally shed its inhibitions about disinvesting from the money-guzzling airline. The failure to divest stakes in Air India, considered seriously during the NDA government of 1999 to 2004, has proven to be a costly decision.

There was criticism that public servants — both bureaucrats and politicians — were torpedoing the disinvestment as they had a vested interest. As the government’s official carrier, the bureaucratic and political class avail of free tickets and other privileges on AI. To compound the failure to disinvest, the UPA government and its civil aviation minister Praful Patel came up with a hair-brained attempt to revitalise AI with a fleet acquisition plan that landed the airline deeply in the red. From a loss of Rs 63 crore in 2002-03, Air India’s debt has crossed Rs 50,000 crore and the servicing of the debt requires over Rs 4,000 crore annually.

The Comptroller and Auditor General had panned the aircraft acquisition and the subsequent merger of Air India and Indian Airlines, noting that the ambitious US$11 billion hire-purchase of 111 aircraft had made the airline “financially unviable”. Air India is a relic of India’s experiment with socialism when it was fashionable for the government to run all sorts of businesses. Arguably, the money lavished on Air India can be better spent on the government’s poverty alleviation and social welfare schemes.