Mudda discusses move to bring in foreign investment for Air India, says airline enjoyed monopoly for too long even as interest burden touched Rs 50k crore
India eases foreign direct investment (FDI) norms that would create automated route for investors. It has allowed overseas carriers to acquire 49 percent of Air India and a 100 percent FDI in single brand retails, among other rules. The cabinet has also approved FDI in single brand retail through automated route.
Thursday’s edition of Mudda, APN’s daily current affairs show discussed the matter. Moderated by Akshay Tripathi, the guests were economist Ravi Singh, former Congress MP Rajesh Mishra, BJP MP Ram Charitra Nishad, aviation experts BS Siwach and Vipul Saxena, and APN’s consulting editor Govind Pant Raju.
Ravi Singh said: “The government has to bring in FDI if it wanted to fulfill its ambitious missions of improving the infrastructure of the country. If companies come from abroad it will increase employment. Air India has been given 49 percent FDI. It means overseas carriers can invest 49 percent in it and 51 percent will be from domestic (government) investments. The conditions are that the headquarters should be in India and the chairperson should be an Indian. Air India has a debt of more than Rs 50,000 crore. So the government can either collect tax from citizens and give it to subsidy or apply FDI. This step would act as a boon for Air India and the government. FDI was there before too but the investments were almost zero. Then the investors had to get the cabinet clearance which seemed to be a cumbersome process. Hence, investors shied away from India. But now through the automated route they can easily invest.
Rajesh Mishra expressed doubts over its success. He said the step will create chaos for small business owners.
BS Siwach said: “Air India has enjoyed a monopoly for a long time. It was run by bureaucrats and the government. They had exploited it in many ways by getting free passes and tickets. Then came open sky policy. And then minister of state for civil aviation Praful Patel merged Air India with Indian Airlines. Thus, began the downfall of Air India. Its interest burden increased more than Rs 50,000 crore. Congress decided to give it a bail-out option to recover. But using taxpayer’s money in such projects was criticized as it did not have any social impact. Since then every year its debt burden is increasing. This step will save the sinking vessel.”
Vipul Saxena said through 49 percent FDI the government diverted the burden to foreign investors which would otherwise have come on taxpayers. He said: “The management of the company will remain with us. And, if foreign partners come they will surely bring with them new business perspectives which would help us. Foreign partners will also keep a check on the ways their money is being spent. FDI comes with a very low interest rate while domestic loans come with an interest rate of about 16%. So through FDI recurring burden will definitely decrease.”
-Compiled by Usha Rani Das