Air India Will Be 100% Privatised, Sold To Private Firms; Employee Unions Warn Of ‘Disastrous Consequences’
The government is planning to sell its 100% stake in Air India and will soon invite bids for the same.
Why To Sell 100% Stake?
Recently Government called for bids to sell some stake of Air India to some potential buyers but seeing their hesitation in the past they decided to sell a 100% stake of this loss-making national carrier.
An anonymous finance ministry official said, “The expression of interest document for Air India will be put out anytime now, at least before the end of this month. The plan is to sell 100% stake in the airline. The proposal needs clearance from a ministerial panel before it is made public,”.
The sale of the national carrier is important for the government as they have to meet its aspiring disinvestment target of ?1.05 trillion for the fiscal year 2019.
Meeting this target is very critical as its estimated corporate tax rate cut will cause a revenue loss of around ?1.45 trillion.
A Panel To Divest
As per the reports, a ministerial panel is formed to divest Air India which is headed by home minister Amit Shah. They had the first meeting in September to explore all the options available in this regard.
The panel also includes finance minister Nirmala Sitharaman, civil aviation minister Hardeep Puri, and railway and trade minister Piyush Goyal. The panel will soon be formally clearing doubts about the privatization process for Air India.
Resistance From Union
The Air Corporation Employees Union (ACEU), Air India’s largest union claimed that the decision of privatizing the airline will have “disastrous” consequences and it won’t be of any benefit to the nation or the sector.
According to Union, against this privatization bid, ACEU has planned to start a movement called “united struggle” which already became unsuccessful twice in the past.
The union is accusing the government of ‘ignoring’ their ‘logical and reasonable’ arguments against this bid. The union said that the government tried to sell Air India but failed due to unavailability of any buyer. (reference ET)
Here the interesting point is around six airlines have shut down in the past five years due to different reasons which include well-known names like Jet Airways, Air Pegasus, Air Odisha, Air Costa, Air Carnival and Zoom Air. (reference Mint)
At the end of March 2018, Air India’s net debt accounted Rs 55,000 crore which has gone up by Rs 58,351.93 crore at the end of March 2019 which includes working capital and aircraft-related debt.
With the sale of Air India, the government will be able to exit a loss-making business.