Interim Budget: Only Rs 1 lakh support for debt ridden Air India

Interim Budget: Only Rs 1 lakh support for debt ridden Air India

Air India. (File Photo: IANS)

New Delhi, Feb 1 (IANS) The government has provided a token amount of just about Rs 1 lakh as budgetary support to the ailing national carrier Air India which has been saddled with a debt burden of around Rs 55,000 crore.

In the Interim Budget presented by Finance Minister Piyush Goyal to Lok Sabha on Friday, an allocation of only about Rs 100,000 has been provided to the national carrier.

Separately, the airline has been allowed to raise Rs 434 crore through Internal and Extra Budgetary Resources (IEBR).

However, the Finance Minister has proposed to provide Rs 2,600 crore for the next fiscal to a special purpose vehicle (SPV) -- Air India Assets Holding Ltd -- created to transfer a substantial portion of national carrier's debt.

As per the ministry-wise summary document of Budget provisions, the government had allocated Rs 3,975 crore to the carrier in the revised estimates for Budget 2018-19.

The cash-strapped airline has received loans worth Rs 2,600 crore from the National Small Savings Fund, while the Central government was expected to further infuse Rs 1,500 crore in the company.

Additionally, the Interim Budget has proposed to provide the airline with Rs 1,084 crore for the purchase of two new aircraft for "Special Extra Section Flight" or VVIP operations.

The Finance Minister has proposed to provide Rs 2,600 crore to the SPV for the next fiscal, while Rs 1,300 crore has been provided in the revised estimates for 2018-19.

"The provision is kept for servicing of loan transferred to SPV as a result of financial restructuring of Air India," the document said.

In November, the government had announced of its plans to transfer Rs 29,000 crore out of the a debt burden of around Rs 55,000 crore owed by the national carrier.

In addition, the government has planned to provide the SPV with proceeds from divestment of the airline's land banks, buildings and ground handling subsidiary -- Air India Air Transport Services Limited to retire the debt.

Further, the government is expected to issue the Preliminary Information Memorandum (PIM) for the divestment of Air India's ground handling subsidiary by next week.

The purpose of PIM is to provide certain information about the company to enable the interested parties to make assessment about the proposal prior to the submission of Express of Interest (EoI) bids.

Last year in November, an inter-ministerial panel, Air India Specific Alternate Mechanism, decided to divest the government's stake in AIATSL.

The steps to financially revive the airline come as the state-owned carrier failed to attract any bidder after the government last year had offered to sell 76 per cent stake in Air India.

On May 31, 2018 the Ministry of Civil Aviation said that "no response" was received even during the extended submission deadline for the EoI bids under Air India's divestment process and the "further course of action will be decided appropriately".

--IANS

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