Govt Spends Rs 14,500 Crore On Airports Before Selling Them To Private Companies! But Why?

The public would eventually have to bear the costs of the government’s spending spree.

Since 2017-18, the government has spent and will be spending Rs 14,500 crore on revamping infrastructure at 25 airports it is planning to privatise.

Where Did The Money Go?

The Airports Authority of India (AAI) has spent billions of rupees in the following:

  • Building new terminal buildings, runways
  • Reinforcing taxiways
  • Upgrading aircraft landing systems, radars

 and other heavy duty and capital intensive infrastructure works.

Six airports have been handed over to the Adani group for 50 years.

It spent over Rs 300 crore in completing various infrastructure works at these six airports.

Of this, Rs 100 crore was spent on extending and strengthening runways at Thiruvananthapuram and Guwahati.

Adani Accused Of Not Paying Dues

The AAI employees’ union wrote a letter to PM Narendra Modi accusing Adani of failing to pay for the works that were being undertaken.

Adani was supposed to pay Rs 2000 crore including GST after the handover of three airports. 

The union demanded stringent action including forfeiture of performance deposit and ultimately cancellation of the contract.

Agreements signed by Adani for three airports state that he is liable to pay “all amounts that have been incurred by AAI in respect of contracts relating to work in progress.”

Adani’s Defense

This amount was to be paid by Adani within 120 days from the commercial operation dates.

Adani’s spokesperson defended him and said that for three airports – Thiruvananthapuram, Guwahati & Jaipur – that he has not yet taken over, he will follow the timelines set out for dues.

The spokesperson added that he has paid the entire dues relating to the privatization of Ahmedabad, Lucknow and Mangaluru airports to the AAI.

Disappointing Performance 

Airports including Chennai, Amritsar, Ranchi, Dehradun and many others are set to be transferred to private players from 2022 to 2025 in a bid to earn Rs 20,872 crore.

The amount to be earned from selling them off might fetch the government good returns on what it has spent on them, but there is no sure sign of the exercise being successful yet.

For example, the Modi government is still struggling to privatise Air India.

Moreover, revenues from its two biggest public-private participation drives at Delhi and Mumbai airports have virtually stagnated over the last few years.

The Common Man To Bear Costs (Again)

The public would eventually have to bear the costs of the government’s spending spree.

This is because in order for corporations to maximise their profits and realise the money paid to the government, they would have to start levying high airport user charges.

So, “citizens using airports built with their own money will be double taxed”, sums up Biswajit Dhar, professor of economic studies and planning at Jawaharlal Nehru University (JNU).

Air India Will Be Sold To Tata Group Or SpiceJet Before December; Deadline Over For Final Bids

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