FB   
 
Powered bysps
        Society for Policy Studies
 
 

 
Sell Air India: To boost economy, Modi government must invest resources where they are really needed
Updated:May 30, 2017
 
Print
Share
  
increase Font size decrease Font size
 
Finance minister Arun Jaitley has made a lucid and compelling case for why the government should divest stake in Air India. His argument should now be taken to its logical conclusion with a strategic sale of the loss-making airline. As Jaitley says, Air India’s market share is now only 14%. Private airlines are already fulfilling 86% of market demand and there is no doubt they can fulfil all of it. Government resources are scarce. It makes no sense for government to be running businesses like airlines or hotels where the private sector does an excellent job. Where the private sector can deliver, government spending represents misallocation and haemorrhaging of taxpayer’s money.
 
The NDA government must, therefore, privatise Air India. This will free up resources which can be deployed in areas where the private sector cannot meet all needs, and which happen to be poorly served in India, such as healthcare and education. As minister in the earlier NDA government, Jaitley had pushed for disinvestment in Air India. Unfortunately, it did not fructify and the airline became a financial drain on the exchequer.
 
Air India’s financial performance over the last decade has been appalling. It has a registered net loss every year since 2007-08. In April 2012, government put in place a turnaround plan which envisaged financial support of Rs 30,231 crore over the next nine years. Till now, almost Rs 25,000 crore has been spent with little to show; instead Air India’s market share has shrunk to 14%. Apart from compelling economic reasons to disinvest Air India, Prime Minister Narendra Modi has declared war on VIP culture. Government ownership of Air India encourages ministers, parliamentarians and bureaucrats to make unreasonable demands at its expense – as Shiv Sena MP Ravindra Gaekwad’s boorish behaviour recently demonstrated.  Selling Air India would also be a significant blow to India’s VIP culture.
 
The previous NDA government’s reform record was better than what this NDA government has demonstrated so far, which is why investment, credit and job growth are flagging currently. However, the PM’s stock is running high and he has the boldness, political credibility and communication skills to launch big-bang reform. Cutting unproductive subsidies on a large scale would be such a reform. A strategic disinvestment of Air India will send an important signal in this regard, unleashing animal spirits in the economy.
 
 
 
 
 
Print
Share
  
increase Font size decrease Font size
 

Disclaimer: South Asia Monitor does not accept responsibility for the views or ideology expressed in any article, signed or unsigned, which appears on its site. What it does accept is responsibility for giving it a chance to appear and enter the public discourse.
Comments (Total Comments 0) Post Comments Post Comment
Review
 
 
 
 
spotlight image Since Prime Minister Sheikh Hasina assumed office again in Bangladesh in 2009, bilateral relations between New Delhi and Dhaka have been on a steady upward trajectory.
 
read-more
A top Chinese Army official on Sunday said negotiations with the Indian Army paved the way for the resolution of the Doklam stand-off on the India-China border.
 
read-more
A unique and passionate gathering of acrophiles, or mountain lovers, took place in neat and picturesque Aizawl, the capital of Mizoram state in north-eastern India in September.
 
read-more
India’s foreign policy under Prime Minister Narendra Modi has attained a level of maturity which allows it to assert itself in an effective manner. This is aimed at protecting the country’s national interests in a sustained way.
 
read-more
As about-turns in the three-year-old BJP government go, this must be among the shortest and most important tweets issued by any BJP leader. And although Prime Minister Modi spent Diwali with soldiers in Gurez less than a week ago, it was left to Home minister Rajnath Singh to announce a major policy shift on Jammu & Kashmir at 4 pm
 
read-more
  In his report at the opening of the 19th National Congress of the Communist Party of China, Xi Jinping redefined the principal contradiction facing Chinese society in the new era, namely between unbalanced, inadequate development and the people's ever-growing needs for a better life. Providing this better life has become
 
read-more
As political roller coasters go, there is none as steep and unpredictable as the one shared by the United States and Iran.
 
read-more
In snap polls in Japan, Prime Minister Shinzo Abe’s Liberal Democratic Party-led coalition has secured a two-thirds majority in the lower house of parliament.
 
read-more
On “Defining Our Relationship with India for the Next Century”
 
read-more
Column-image

Title: The People Next Door -The Curious History of India-Pakistan Relations; Author: T.C.A. Raghavan; Publisher: HarperCollins ; Pages: 361; Price: Rs 699

 
Column-image

Could the North Korean nuclear issue which is giving the world an anxious time due to presence of hotheads on each side, the invasion of Iraq and its toxic fallout, and above all, the arms race in the teeming but impoverished South Asian subcon...

 
Column-image

Title: A Bonsai Tree; Author: Narendra Luther; Publisher: Niyogi Books; Pages: 227 Many books have been written on India's partition but here is a firsthand account of the horror by a migrant from what is now Pakistan, who ...

 
Column-image

As talk of war and violence -- all that Mahatma Gandhi stood against -- gains prominence across the world, a Gandhian scholar has urged that the teachings of the apostle of non-violence be taken to the classroom.

 
Column-image

Interview with Hudson Institute’s Aparna Pande, whose book From Chanakya to Modi: Evolution of India’s Foreign Policy, was released on June 17.

 
Subscribe to our newsletter
Archive