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The government has decided not to go ahead with its decision to sell a 76 per cent stake in national carrier Air India.
This decision was taken at a high-level convened by Finance Minister Arun Jaitley on Monday. The meeting was attended by Civil Aviation Minister Suresh Prabhu, Interim Finance Minister Piyush Goyal, Transport Minister Nitin Gadkari and senior officials.
Though officials declined to confirm the details discussed during the meeting, they maintained that the proximity of the general elections, less than 11 months away, forced the decision.
Moreover, it was felt that since the government had not received any bids for the airline, the process should not go ahead. Instead, cost-cutting measures should be adopted and efforts made to monetise assets to run the airline, sources indicated.
Government sources also indicated that funds would be made available to ensure that Air India’s operations are not affected. They pointed out that with the airline posting operating profits there was no need to push its divestment process. Instead operational efficiency should be improved.
No bids at all
The government’s second attempt to privatise Air India came a cropper when not a single bid was received till May 31, the last date for interested parties to submit an Expression of Interest for the airline.
To woo potential bidders, the government issued clarifications, including a detailed note on ‘Arm’s Length’ and also extending the last date for receiving the EoIs.
The government also tried to sweeten the deal by assuring potential bidders that the airline’s debt would be parked in a special purpose vehicle, and that the government would only have the rights of minority shareholders in India.
It also assured potential investors that a voluntary retirement scheme for Air India’s employees would need to meet government guidelines.
Meanwhile, post the failure of the divestment process, RSS-affiliate the Swadeshi Jagran Manch (SJM) has been pitching for an Initial Public Offering for the airline while Anand Mahindra has called for appointing a government official “with the potential and passion” of E Sreedharan (former Managing Director, Delhi Metro Rail Corporation) as the Chairman and Chief Executive Officer of the airline.
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