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Rediff.com  » News » 'Why not sell Air India equity in the stock market?'

'Why not sell Air India equity in the stock market?'

January 15, 2018 11:11 IST

'Air India has real estate assets in its name like that of a maharaja.'
'Once you reduce the airline's debt by selling off its land, it may even become a profitable company.'

An Air India flight takes off from Ahmedabad. Photograph: Amit Dave/Reuters

Last week, the Narendra D Modi government permitted 100% FDI under the automatic route for single brand retail and do away with the mandatory 30% procurement from within India.

The government also allowed foreign investment up to 49% in Air India.

The Rashtriya Swayamsevak Sangh-affiliated Swadeshi Jaagran Manch believes these decisions are not in India's interests.

"We want the government to find out why Air India failed. Who is responsible for the situation which the airline is in?" Dr Ashwani Mahajan, co-convenor, Swadeshi Jaagran Manch, tells Rediff.com's Shobha Warrier.

 

Why is the Swadeshi Jaagran Manch against the government's decision to have 49% FDI in Air India?
Why do you think it is not in the interest of the country?

Air India has been incurring losses for many years and the government had pumped Rs 30,000 crores (Rs 300 billion) to bail it out.

But it did not work, that is why the government has permitted 49% FDI in the airline...

Yes, attempts to bail it (Air India) out have not worked.

First, we want the government to find out why Air India failed.

Who is responsible for the situation which the airline is in?

Why was there no enquiry on its failure?

Air India has real estate assets in its name like that of a maharaja. Our objection to the government's 49% FDI in Air India decision is because these idle assets with Air India should be monetised before selling the company.

You can reduce the debt of the airline once you monetise the assets.

Once you reduce the airline's debt by selling off its land, it may even become a profitable company.

If you divest then, you are selling a profitable company. Why not sell its shares in the market then?

It is a good move on the government's part to sell equity, but how do you value Air India is the question.

Everybody would say it is incurring losses and so is a loss-making company. That's why we want the government to reduce its losses by selling the large real estate the airline has first.

During NDA1 (then prime minister Atal Bhari Vajpayee's government also, our objection was to the lack of transparency in deals.

It is likely to happen again if we go for 49% foreign investment. So far this government has followed the equity route and therefore, there was no objection.

When Lalu Prasad Yadav was railway minister, prime land that belonged to the Indian Railways was sold to reduce debt, but the financial situation of the railways has not changed even now.
So, is selling real estate the solution to rescue Air India?

I am not saying it is the solution.

I am not asking Air India to sell the land and run the business.

The government has pumped in money earlier to run it and the loan has to be repaid with interest.

It is not that we are against bailing out (Air India).

We are not against divestment of Air India whichever the government initiates the process.

However, they have to follow a procedure to divest.

The 49% FDI is not in tune with the established norms of divestment.

First of all, various governments allowed Air India to get into debt. We have to know who was responsible.

Why should the government be running an airline?

We are not saying governments should run airlines. We will never say that the government should run the airline business, and keep incurring losses.

The assets were created by public money. Now, you are selling the entity without fixing the responsibility of running it at a loss. That is our objection.

Are you against 100% FDI in retail only because the government decided to do away with the mandatory 30% procurement from within India?

100% FDI in retail was already there, but what they have done now is they have made the 51% also through the automatic route.

This will set the stage for anybody coming to India to sell their brands.

So, while facilitating foreigners, you are letting them eating into the business of our small businessmen.

For what benefit are you doing this? Nobody knows.

On one hand, you are talking about making Make in India a success.

On the other hand, you are doing away with the 30% mandatory procurement from Indian firms.

What is the logic behind this?

When you do away with this 30% clause, these companies will be selling everything procured from outside India.

This will affect our manufacturing sector and also the investment in the manufacturing sector.

Why do you think the government wants to do away with the 30% mandatory procurement clause?

It seems some people in the government are obsessed with the idea of ease of doing business.

When you are making ease of doing business easy for foreigners, you are making ease of doing business difficult for Indians.

The government should make it mandatory that any single brand foreign company that does business in India should procure 30% items within India for five years.

After that, it should be 50% and this should keep going up.

By then, these entities would have been established and the vendors would also be familiar with them.

We are also cautioning the government against any decision to allow FDI in multi-brand retail in any format, as this may fraught with severe implications of people's opposition and also would be considered a big U-turn for the present regime.

Is it not ironical that on these issues the Swadeshi Jaagran Manch and the Communist parties are on the same side?

We can be on the same side on various issues.

Many people may walk on the same side of the road, but the destination can be different!

Shobha Warrier / Rediff.com