Policy

Nearly ₹52,000 cr allocated to clear AI dues

Abhishek Law | Updated on: Feb 01, 2022

Most of the expenses and dues were not provisioned for in FY22 Budget estimates

New Delhi, Feb 1 The Centre is allocating close to R₹52,000 crore towards clearing Air India’s dues.

“As against a total expenditure of ₹34.83 lakh crore projected in the Budget Estimates 2021-22, the Revised Estimate is ₹37.70 lakh crore. The Revised Estimate of capital expenditure is R6.03 lakh crore. This includes an amount of Rs1,971 crore towards settlement of outstanding guaranteed liabilities of Air India and its other sundry commitments,” Finance Minister, Nirmala Sitharaman said while presenting her Budget.

The Union Civil Aviation Ministry saw its revised expenditure for FY22 shoot up to ₹72,652 crore – a 2,153 per cent increase from the allocated R,224 crore, the Budget 2022-23 documents noted.

The expenses were incurred primarily towards Air India that include loans to the airlines, grants in aid to the carrier for cash losses, guaranteed borrowings, re-payment of past dues and liabilities among others. Most of these expenses were not provisioned for in FY22’s Budget estimates.

According to the Budget 2022-23 document, the Centre ‘s spending will be around 4,500 crore as loans to Air India. Another R2,057 crore is equity infusion towards Air India Asset Holding Company Ltd – the SPV set-up to transfer part assets and liabilities of Air India.

Grants in to Air India for cash losses during Covid period stood at₹1944 crore in FY21 (Revised estimates).

Allocation

For FY2022-23, the allocation for the Civil Aviation Ministry stood at ₹10,667 crore which include an allocation of ₹600.7 crore for regional connectivity scheme or UDAN (similar to what was allocated in 2021-22. As per the revised figures for 2021-22, the expenditure on regional connectivity scheme rose to ₹994 crore in 2021-22.

‘No cut in ATF tax’

Meanwhile, Ronojoy Dutta, Whole Time Director and Chief Executive Officer, IndiGo – the country’s largest low cost airlines – said that the sector and the company were expecting tax concession in the forms of cut in ATF excise duty and allocation of concessional finance to airlines to help come out of the pandemic.

Interestingly, ATF prices saw an 8.5 per cent hike on Tuesday following a spike in global fuel prices. ATF price was hiked by ₹6,743.25 per kilolitre (kl) to ₹86,038.16 per kl in the national capital, according to a price notification of state-owned fuel retailers.

According to Poonam Verma, Partner, J. Sagar Associates (JSA), though allocations have gone up, it does not really provide any immediate relief to the struggling sector.

“A strong government support at this stage could have played a pivotal role to firmly entrench the nascent signs of recovery being currently seen in the sector since the last couple of months. Increase in ATF prices is a further blow to the industry,” Verma said.

Published on February 01, 2022
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