A Parliamentary Standing Committee has sought details from the government on its strategic disinvestment plans for national carrier Air India.
The department-related Parliamentary Standing Committee on Transport, Tourism and Culture, chaired by Rajya Sabha Member of Parliament Mukul Roy, is set to meet the Central government officials on Friday.
“To hear the views of the Ministry of Civil Aviation, Department of Investment and Public Asset Management (Ministry of Finance) and Air India on Disinvestment of Air India,” the agenda of the meeting said.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on June 28 gave its in-principle approval for the strategic disinvestment of Air India and its subsidiaries.
The CCEA also set up a group of ministers under Finance Minister Arun Jaitley to examine the modalities of the national carrier’s stake sale. The Ministerial group will decide upon the “treatment of unsustainable debt of Air India, hiving off of certain assets to shell company, de-merger and strategic disinvestment of three profit-making subsidiaries, quantum of disinvestment and the universe of bidders.”
Minister of State Civil Aviation Jayant Sinha told the Rajya Sabha on Tuesday that the decision to divest a stake in Air India was based on government think-tank NITI Aayog’s recommendations in May this year.
“In its recommendations, the Aayog had given the rationale for the disinvestment of Air India and has attributed the main reason as fragile finances of the company. AI has been incurring continuous losses and has huge accumulated losses,” Mr. Sinha said in a written reply.
“Further, NITI Aayog in its report on Air India says that further support to an unviable non-priority company in a matured and competitive aviation sector would not be the best use of scarce financial resources of the Government,” Mr. Sinha added.
Mr. Sinha said in the Lok Sabha on Thursday that Air India’s market share on domestic routes has reduced from 17.9% in 2014-15 to 14.2% in 2016-17.
Air India has accumulated total debt of ₹48,876 crore till March 2017. The national carrier has been reporting continuous losses due to its high debt with its net loss at ₹3,728 crore in 2016-17 compared with ₹3,836 crore in 2015-16.
Hours after the Union Cabinet gave its nod to Air India's strategic disinvestment, India’s largest low-cost carrier IndiGo expressed interest in acquiring a stake in its airline business, mainly related to its international operations. Tata Sons were also reportedly in talks with the government seeking details on the national carrier’s strategic disinvestment.
