The Hindu Business Line : Govt mulls equity infusion into IA, AI

THE Government is likely to have a re-look at the Budget proposal to levy a tax on leasing of aircraft from September 1 this year. It is also considering a proposal to infuse more equity into Air India (AI) and Indian Airlines (IA).

This emerged at a meeting that the Minister of Civil Aviation, Mr Praful Patel, had with the Union Finance Minister, Mr P. Chidambaram, here on Tuesday.

Mr Patel told newspersons after the meeting that the final arrangement of equity infusion will have to be worked out.

In its report, the Kelkar Committee, it may be recalled, had suggested equity infusion of Rs 325 crore into Indian Airlines.

The Budget 2004-05 has made a token provision of Rs 1 crore each for the two airlines for equity payment which is linked to their fleet acquisition plans.

Mr Patel also indicated that the issue of differential pricing of aviation turbine fuel (ATF) on account of the various rates of sales tax in different states would be sorted out with the introduction of Value Added Tax (VAT) next year.

Besides, the issue of some funds being made available from the Rs 40,000-crore Inter-Institutional Group (IIG) for the development of 20 secondary airports was also taken up at the meeting.

The Budget has proposed a Rs 40,000-crore IIG, which will include IDBI, IDFC, ICICI Bank and SBI, among others, to pool their resources on a callable basis to ensure speedy conclusion of loan agreements and implementation of infrastructure projects, including airports.