Air India: Were we Selling the Airline, or Peddling Debt?
The government has been struggling to get rid of Air India for two decades. It was first mooted under Atal Bihari Vajpayee in 2000, then shelved under Manmohan Singh, but formally notified by Prime Minister Modi in June 2017. All good, except for the fact that such onerous conditions were put on its sale—including a strategic veto for the government with a 26% shareholding, a ban on corporate actions like merger/amalgamation by the new owner, and a ban on changing the brand name – betraying how clueless India’s bureaucracy was about market economics—that made it unsellable!
So, Air India carried over as a failure from Modi’s first term, after which some conditions were tweaked to make it attractive, including amputating Rs 30,000 cr in debt to leave just Rs 23,000 cr for the new buyer to deal with. But Covid-19 made a sale even under those relaxed terms impossible.
Finally, the state was coerced into making a…