‘Ambivalence’ towards private players exists

Published - January 31, 2017 10:54 pm IST - NEW DELHI:

Calling for more privatisation in civil aviation, banking and fertiliser sectors, the Economic Survey cited Air India’s example to show India’s “ambivalence” towards private players.

“The symptoms of this ambivalence towards the private sector manifest in multiple ways. The most well-known example is the difficulty of privatising public enterprises, even for firms where economists have made strong arguments that they belong in the private sector,” according to the Survey.

“Consider the civil aviation sector. Defying history, there is still the commitment to make the perennially unprofitable public sector airline “world class.”

Air India is surviving on a ₹30,231 crore equity bailout package approved by the previous government for a ten -year period ending 2021-22. The Centre has so far infused around ₹24,000 crore into the national carrier since 2011-2012. The airline posted net loss of ₹3,936 crore in 2015-16 and has outstanding loans of ₹46,570,35 crore as on September 30 last year.

The present National Democratic Alliance (NDA) government has remained silent on the issue of privatising Air India.

“It’s a beautiful airline so in that sense you will like it to survive but you can’t commit the taxpayers’ money for eternity. It won’t work that way,” Civil Aviation Minister Ashok Gajapathi Raju had told The Hindu in an interview last year.

The Survey further highlighted the government’s changed approach towards airport privatisation from change in ownership to awarding management contracts.

The Centre recently decided to privatise terminal buildings at Jaipur and Ahmedabad airports. In 2015, the Centre had decided to hand over the operations, management and development of four airports to private players but the plan was dropped later that year.

The policy reform in civil aviation sector “has been animated as much by an interventionist as liberalising spirit, reflected for example in restrictions on pricing.” Unlike in other countries, airlines in India have to charge baggage fee to customers as per government rules.

The banking sector is also saddled with similar challenges and “discussion of divesting the government’s majority stake in public sector banks is often difficult in part because of the view that they are legitimate instruments for the state to allocate and redirect resources,” according to the Survey.

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