| Introduction: Write a brief about Air India privatization. Body: write about the benefits of Air India Privatization to different stakeholders. Write few issues associated with privatisation. Conclusion: Provide a new and balanced perspective on privatisation. |
Ans-
Air India (AI) has been recently handed over to Tata group, ending its public ownership. The Tata group won the auction in October with a bid of Rs 18000 crore.
This transfer will have significant positive impacts on different stakeholders:
Government
- It will take the government closer to its disinvestment target for the current financial year.
- It will provide the much-needed financial resources for the recovery of economy and meet the expectation of greater outlay for health care.
- Air India was making losses around 20 crores per day. It had consumed Rs 1.1 lakh crore since 2009. it will save taxpayers money from paying for daily losses of AI.
- It would provide the push for taking other tough disinvestment decisions that the government in keen on taking in future.
- It will provide push for Minimum government Maximum governance to eliminate the need for the government’s involvement in non-strategic areas.
The airline industry
- A strong international carrier in India will give a boost to the large airports built in Delhi, Hyderabad, Mumbai and Bengaluru.
- It will possibly give the option of flying one more low-cost carrier domestically. Which will provide diverse options to the flyers.
- The combination of Vistara, Air Asia and Air India can create a large airline that can compete with the major international lines.
The Tata Group
- It is an emotional win for Tatas, rooted in the fact the airline was creation of Tatas in 1932, which was later nationalized.
- Apart from emotional win, it will provide access to ground resources, monopolized international routes, and a fairly new fleet of aero-planes of Air India.
Indian economy
- It has the potential to push the growth in India’s tourism industry. Air India will provide an alternative of foreign carriers, to tourists.
- A successful turnaround of Air India could also help the Indian economy as it is a well-established fact that aviation has a multiplier effect on the economy.
- It will raise investor’s confidence in Indian economy, promoting efficiency in PSUs in particular.
Even with its potential benefits stakeholders, there are still concerns
- the Sale of Air India still leaves Government with Rs 43,562 crore of debt, which will have to be serviced from other sources
- The governance issues in functioning of PSUs,
- Political Interference in management of PSUs.
Privatisation of government owned companies shall not be looked at only from the perspective of raising revenue, but also from the perspective of more productive utilization of assets. The privatization of government companies shall also be accompanied with reforms in the existing public sector.
