ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

PANEL VIEW

ADVERTISEMENT

The taxpayer’s money being misused to keep Air India afloat is no news. But the government has done the unthinkable to bail out the failed carrier.In a highly questionable move, the Maharaja has been granted Rs 1,000 crore from the National Savings Fund to meet operational expenses of the lossmaking carrier. The corpus of NSSF comprises contributions to various small savings like the Public Provident Fund, Sukanya Samriddhi Yojana and the Kisan Vikas Patra.What is even strange is the government’s move to provide a fresh sovereign guarantee to Air India for raising loansworth Rs 500 crore.Strangely, these moves come at a time when the airline’s debt and operational losses are mounting, raising questions on the rationale behind providing fresh funds from the taxpayer’s kitty.Reports suggest that the government is proposing to make some big tweaks to the divestment plan to woo bidders. When the centre put the airline on the block last year, there were no takers with prospective bidders backing out citing some of the contentious bid terms.On ET NOW’s India Development Debate, aviation experts and economists discussed the government’s fresh plan to bail out Air India.Here are some interesting takeaways:For all practical purposes the government could have extended loan from its budget. I think the reflection on the fiscal deficit is happening after a lag. It’s not shown as a formal part of the fiscal deficit. There is no other reason for dipping into the NSS Fund. NSS has sovereign guarantee. I doubt if small savers are thinking too much about where their money is invested as long as their own money is safe. That, unfortunately, is lack of public consciousness which makes the government take silly decisions.Regarding small savings, this is a budgetary issue. This Rs 1,000 crore is not a big deal. The government has reduced its borrowings by Rs 70,000 crore due to small savings and buyback proceeds. This additional money from small savings, they could give it to Air India. This may not reflect in the budget. I hope some amount of calculation is done. We are closer to the election; no more attempts will be made to divest AI. It’s acting as a drag on the sector.There has been only ad hoc decisions by the government to keep Air India going. After disinvestment failed, they have to put in some money. Government is not grappling with what Air India is all about. Air India won’t be able to meet its needs, it simply cannot. Infusion of funds as long as Air India is a government entity should not make news. You got to get into its history to know why Air India is struggling for survival.I don’t think money will disappear from your account because it has sovereign guarantee. There is a sense of entitlement to keep Air India flying. Has anybody ever calculated what the cumulative AI losses areRs Small funds come from lower middle classes, people who struggle, they believe the government and that trust has been violated when the government dips into that money to keep the permanently ill AI afloat. This money is bound to sink. Why should I hand over my tax money to keep a broke airline afloatRs