The Centre on Tuesday allocated Rs 51,917 crore towards clearing Air India’s dues, Finance Minister Nirmala Sitharaman said while presenting the Budget for 2022-’23, The Indian Express reported.
The Centre on Thursday handed over the debt-ridden Air India to Tata Sons. The Ministry of Finance said that strategic disinvestment of the airline was complete and the government had received Rs 2,700 crore from Talace Private Limited, a subsidiary of Tata Sons.
The Centre was supposed to pay Rs 46,000 crore of the Rs 61,000 crore debt, according to Business Standard.
Tata Sons was given a debt of Rs 15,300 crore with 100% shares of the Air India and Air India Express and 50% shares of the airport service provider Air India SATS.
On Tuesday, Sitharaman said that the new allocation towards Air India’s debt was accounted for in the revised estimates of total expenditure in 2021-22, The Indian Express reported.
“As against a total expenditure of Rs 34.83 lakh crore projected in the Budget Estimates 2021-22, the Revised Estimate is Rs 37.70 lakh crore,” Sitharaman said. “The Revised Estimate of capital expenditure is Rs 6.03 lakh crore. This includes an amount of Rs 51,971 crore towards [the] settlement of outstanding guaranteed liabilities of Air India and its other sundry commitments.”
When Air India was transferred to Tata Sons, a consortium led by the State Bank of India had approved a plan to provide long-term debt to the company to service the large debt, according to The Indian Express.
The airline was saddled with a huge debt from years of loss-making operations. It was the primary hurdle to the government’s disinvestment attempt.
The first-ever attempt at disinvesting the airline was taken in 2001 during the Atal Bihari Vajpayee-led NDA government. After initial interest from foreign airlines, the deal had failed after the government announced that foreign airlines will have to partner with an Indian company in order to bid.
In 2018, the Narendra Modi government had planned to divest 76% stake in Air India, ignoring a parliamentary panel’s recommendation to give the debt-ridden airline five years to revive itself. The proposed stake sale, however, failed to take off as the government did not receive any expressions of interest from potential bidders by the end of the deadline.
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