The Union cabinet may clear the decks for the government’s stake sale in loss-making national carrier Air India this week after choosing between the option of an outright sale and partial divestment.
The cabinet note prepared by the Committee of Secretaries includes both the Niti Aayog’s recommendation of complete privatisation and the civil aviation ministry’s proposal of a substantial reduction in the airline’s debt by sale of subsidiaries and assets before privatisation, a senior civil aviation ministry official told ET.
“The proposal gives an option and leaves it to the cabinet to decide,” said the official, who didn’t want to be identified. It was expected to be cleared last week, but could not be taken up by the cabinet, he said.
The move comes about two months after Prime Minister Narendra Modi gave the go-ahead for disinvestment in the airline, which has accumulated losses of more than Rs 50,000 crore and has debt of about Rs 55,000 crore.
The Committee of Secretaries, headed by the cabinet secretary, includes secretaries from the ministries of aviation and finance, Department of Investment and Public Asset Management and Department of Industrial Policy and Promotion.
The Prime Minister’s Office was also consulted during the preparation of the note to be sent to the cabinet, officials said. The proposal by the Niti Aayog, the government’s think tank, is based on studies of revival of various international airlines in which governments exited fully. These include British Airways, Japan Airlines and Austrian Airlines. The proposal entails government taking a hit by waiving Rs 22,000 crore in debt.
The carrier is afloat thanks to a Rs 30,231-crore nine-year bailout programme originally approved by the previous government in 2012.
The asset-sale decision was taken after the airline failed to show signs of a full revival during the three years of this government.
