Finance Minister Nirmala Sitharaman has just announced that the government plans to wrap up the sale of the state-run airline Air India by March. The government started disinvestment with the Indian carrier amid its debt burden of more than INR 50,000 crore in early July. 

With efforts to sell 76 per cent stake in Air India failing to take off in 2018, the government is committed to disinvest completely in order to make the carrier more operationally viable before the stakes are sold. Given the current macro-economic parameters the government not only hopes to reinitiate the process of strategic disinvestment of Air India but also offer more central public sector enterprises a chance for strategic participation by the private sector. 

Promotions and fresh appointments have all been frozen ahead of the stake sale as the carrier is currently making revenue of INR 15 crore per day with around 10,000 permanent employees. The government removing INR 29,000 crore of debt from the carrier’s balance sheets and transferring it to a separate entity or a special purpose vehicle (SPV), the ministry will also be renegotiating its bilateral seat agreement with various countries on the issue of privatising airports owned by the Airports Authority of India.  

The sale of Air India is expected to be completed by March.

Sitharaman said “we are moving on both with the expectation that we can complete them this year. The ground realities will play out”, referring to both the sale of Air India and Bharat Petroleum Corporation (BPCL), highlighting the strategic sale of the two state-run companies as a crucial part of the government’s plan to raise over INR 1 Lakh crore by the end of the current fiscal year. With “a lot of interest” among investors as evident in international roadshows ahead of the sale of Air India, the government hopes to bank on receipts from disinvestment- comprising strategic sale and public offers- to shore up revenues in a year when tax collections are under pressure.

The Minister also added on that the government has taken measures to reverse the economic slowdown at the right time and several sectors are coming out of distress. The finance minister also said industry captains had helped improve their balance sheet and many of them were planning fresh investments. The only question that now remains is whether the Indian carrier will be able to come out of debt through the government’s strategic sale plan to sell the Public Sector Undertaking (PSU)? 

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