Govt to give Rs 80 cr grant to Air India

According to officials, the government has made it clear that the state-owned airline has to improve its performance if it is looking out for more grants from the former

GN Bureau | December 21, 2016

#PSU   #Air India   #debt   #ministry of civil aviation  


National carrier Air India will get only Rs 80 crore as additional budget support in the current financial year from the government – much below its demand of Rs 2,200 crore, reported The Business Standard.

The government has agreed to release a ‘meagre’ grant despite the fact Air India’s chairman and managing director Ashwani Lohani had written to the former that funds crunch might derail the turnaround process of the state-run airline.

“Civil aviation ministry’s concerns over requisite funds were accepted by the finance ministry but the latter expressed its inability to accept the full demand,” the newspaper quoted a civil aviation ministry official.

According to AI officials, though, the Rs 80 crore being offered is too negligible an amount to be invested in an airline. The government has made it clear that the state-owned airline has to improve its performance if it is looking out for more grants from the former.

“The money comes from the Consolidated Fund of India. Every company has to show some performance to get more funding,” said an official.

The newspaper further reported that Lohani had written to the civil aviation ministry in November saying that because of the airline’s huge debt burden, a reduced equity infusion would put the airline’s expansion plan in jeopardy.

He underlined that the airline would be forced to raise temporary loans from the banks to bridge the liquidity gap, thus endangering the liquidity and survival of the company.

Air India has debt of Rs 46,000 crore and has annual interest outgo of around Rs 4,000 crore, the report said.




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