With the proposed disinvestment plan of Air India coming a cropper, it is now left to Prime Minister Narendra Modi to decide on what to do with the airline.

Government watchers say that they will not be surprised if the Modi Government confounds its critics and supporters alike, as it did in the case of permitting 100 per cent FDI in single brand retail in January and finds a fresh roadmap for Air India’s divestment.

There are many similarities between the two situations. At the time when the government decided to permit 100 per cent FDI in single brand retail, there was stiff opposition not only from the Opposition parties but also from within the BJP. At that time Prime Minister Modi bit the bullet and allowed the decision to go through.

When it comes to Air India and its divestment the situation is similar. Earlier this week, Bloomberg quoted Expenditure Secretary SC Garg as saying that the government can consider selling its entire stake in Air India. “A certain kind of strategy was offered that didn’t find many takers and therefore something different will have to be done,” Garg told Bloomberg adding, “There’s no fixed objective that the government should have 24 per cent. It can be re-examined.”

Then came another suggestion from unnamed sources in the government who said that listing the debt-ridden airline was also something that was being considered. While the identity of the government official has not been revealed he is said to be one who enjoys a status above Garg’s. The logic offered by this unnamed source was that listing the airline would help in garnering revenue as well as allow the government to retain control.

This is where the twist in the tale emerges. Union Finance Minister Arun Jaitley had favoured a strategic sale in the case of Air India even as he spoke of listing of other Central Public Sector Enterprises in his Budget speech in February. Garg reports to Jaitley who is a known advocate of free market.

On the other hand, RSS-affiliate the Swadeshi Jagran Manch (SJM) has been pitching for an Initial Public Offer (IPO) of the airline. The unnamed government employee is also said to be a RSS sympathiser. Listing Air India is contrary to what Jaitley said in his Budget speech.

Two different paths

But before the government decides to move on either of these two paths, there are many issues that still remain unclear.

To begin with, it is not very clear on how the government will list Air India. For a company to list it has to make a profit for three years. Whether the operational profit that Air India is showing will be good enough for it to be listed remains to be seen.

More importantly, given the poor financial health of the airline who will buy Air India’s shares? Will the government nudge other public sector companies to invest in Air India so that it can meet its fiscal target? Will they agree? Analysts point out that the manner in which bankers have come under scrutiny for taking what they thought were bonafide business decisions is also putting a question mark on the entire process.

General elections

For the Modi government what is perhaps equally important is that there are only 11 months left for the general elections and a decision like divesting Air India could go against it, given the huge sentiments involved, the number of employees and their families not to mention the political mileage that the workers’ unions, many of which are connected with parties not amicable to the BJP, can garner if they find the decision taken to be unfavourable.

No one knows what the Modi government will finally decide but the decision needs to be taken fast so that the Maharaja can figure out where its future lies.

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