What is the cost of the national carrier’s deal to the nation's exchequer, is the real question?
Reams of writings attempted to understand the advaita of disinvestment as an economic policy instrument. For the last three decades, we are told that the disinvestment is a strategic weapon the governments deploy across the world to reduce the burdens on exchequer and realise the proceeds for larger public good. Anything that is government except the government itself is approached with suspicion, be it infrastructure, service, education, or even health. Most of the vocal and otherwise thinking minds ate the fruit from Eden and started perceiving Satan in every public sector employee. A new breed of intellectuals made their careers with well-oiled arguments defending the philosophy of disinvestment and joined chorus 'business is not the business of the governments.'
The policy of disinvestment under Modi dispensation reached its pinnacle. Prime Minister Narendra Modi's oratory attributed the disinvestment with an amazing ability to resolve the problems of governance. Given the way things are happening in India at present only shows that even this government has to prostrate before the market demi-gods. Whatever you may name it, the ultimate aim of policy prescription is to benefit the private capital at the expense of nation's wealth. There are two examples before the country whose rationale cannot be defended even by Adi Sankara, the demigod of advaita philosophy. Let us consider those two examples.
Vodafone Idea, the third biggest cellular network in India is reeling under Rs. 1.95 lakh crore debt burden, including Rs. 16000 crores interest payable to government of India. Vodafone offered to allot 35 per cent equity share to government in lieu of the interest burden. The Central government is happy to doit. That too this happened when one of the country's monopoly capitalist group Mahindra declared that it cannot set the Vodafone's financial record straight and walked out of the joint venture.
The second case in question is Air India sale. As it is clear by now, the firm floated by Tata paid cash of Rs. 2700 crores to acquire full ownership of the nation's premier flying company, Air India. The reserve price fixed for this sale is a mere Rs. 12906 crores for a firm that had 112 wide-winged aircraft, 24 narrow-winged aircraft, 4400 domestic and 1800 international flight landing and parking slots at various airports across the country and abroad. The central government wanted us to believe that only seven companies thought of participating in the bidding process of whom five were disqualified due to technical reasons. Only Tata's business development team could catch the imagination of the policy makers and stood out as the successful bidder. For this and several other reasons, the Air India sale is filled with an air of suspicion. If one goes by the government's written reply to parliament on July 21, we have to believe that through this sale, the government realised the full cost through this sale process. What is the cost of this deal to the nation's exchequer is the question.
On the completion of this sale, almost all the news makers commented that the prodigal son finally returned home. This is to remind the readers that Air India was originally owned by JRD Tata and later it was nationalised in independent India. Missing in this narration is the fact that the Nehru government nationalised Air India only after paying due compensation to the promoters.
There are enough clues available in the public domain that the central government, since 2018, consistently relaxed and revised the conditions of sale to suit the interests of a selected bidder. Under whose behest these relaxations were granted is the core question the nation warrants transparent answers. Even before the commencement of sale process, while fixing the eligibility criteria, the committee of secretaries opined, as reported by Business Standard, that the government should not insist on negative net worth of bidders, if they are already in airlines business. It should be reminded that including Vistara, owned by Tatas, all the airlines' net worth was showing negative growth only. In 2018, the Air India's outstanding debt was Rs. 33392 crore. Surprisingly, within the span of an year and a half, the outstanding debt rose to Rs. 61562 crores by August 2021. That means, Air India's accumulated debt for about 68 years was only Rs. 33392 crore and in just two years it accumulated additional debt burden of Rs. 28170 crore. This single point itself proves who is best manager of the public assets.
What the nation is told that once the sale is affected, the government will realise a handsome amount which will be useful to offset the debts, if not making outright profit from the sale.
As on sale date, the outstanding debt stood at Rs. 61562 crore by August 2021. Surprisingly, once the decision to sell is finalised, on the pretext of making the bid attractive for the prospective bidders, the government simply floated an Air India Asset Holding Company and transferred 50 per cent of Air India's consolidated debt to this asset holding company. This simply reduced the amount to be realised from the sale deed to half the actual amount.
When the sale process was initially conceived, it was decided by the Cabinet committee on Economic Affairs that the government will retain 26 per cent stake in the company and only 74 per cent is proposed to put up for sale. It was also decided that the successful bidder has to take over 70 per cent of Air India's debt. Stating no bidder expressed interest, the government altered the conditions of sale. Firstly, government put up 100 per cent stakes sale. Secondly, it gave discretion to the bidder to choose to what extent it would take the quantum of debt. After giving these two key concessions, the qualified bidders were asked to present their financial plan. And also, the government got parliamentary nod to spend Rs. 62,057 crores to clear all outstanding dues and liabilities of the Air India. That means, the share at stake has gone up by 25 per cent but the cost of the bid stands same.
This brings us full circle. First, the government reduced the cost of the bid by half, there by imposing a burden of about Rs, 30000 crores on the exchequer. On the other hand, instead of repaying the outstanding dues from sale proceeds, the government cleared all dues by spending Rs. 62057 crores from the exchequer. If we add both these, to off-load Air India to Tata, the government had holes in its pockets to the tune of a staggering Rs. 92000 crores. The story does not end here. The Tata's have got a commitment from the pubic sector banks consortium a loan approximating Rs. 33000 crores at the interest rate of mere 4 -5 per cent. It is to remind us that the Air India till now paid 9 per cent interest rate on its outstanding debts. But the pubic sector banks are willing to grant loans at half the servicing charge they charged from the public sector undertaking. Thus, the series of concessions offered to the successful bidder is nothing short of a scam which needs to be thoroughly and impartially looked into by nothing short of a Joint Parliamentary Committee.
(The writer is freelance writer, former member, central working committee, All India Agricultural Workers Union. The views expressed are personal.)