Having closed essentially the most high-profile disinvestment technique of Air India, the federal government additionally determined to retire the airline’s debt that it transferred to the Special Purpose Vehicle (SPV). In the Union Budget 2022-23, the federal government allotted a further Rs 51,971 crore in the direction of the settlement of excellent assured liabilities of Air India and its different sundry commitments.
This quantity has been accounted within the revised estimates of complete expenditure in 2021-22.
“As against a total expenditure of Rs 34.83 lakh crore projected in the Budget Estimates 2021-22, the Revised Estimate is Rs 37.70 lakh crore. The Revised Estimate of capital expenditure is Rs 6.03 lakh crore. This includes an amount of Rs 51,971 crore towards settlement of outstanding guaranteed liabilities of Air India and its other sundry commitments,” Finance Minister Nirmala Sitharaman stated in the course of the Budget speech.
The Tata Group acquired 100% stake within the airline, in a deal that closed on January 27, for Rs 18,000 crore. Of this, Rs 15,300 crore was taken on as debt, and Rs 2,700 crore was paid to the Centre in money. For servicing the high-cost debt that it has taken on with the airline, a consortium led by the State Bank of India has authorised a plan to offer long-term debt to the Tata Group.
As per the revised estimates of 2021-22, the SPV — AI Asset Holding Ltd — has obtained Rs 62,057 crore, of which Rs 36,254 crore was infused as fairness for compensation of previous government-guaranteed borrowings of Air India; Rs 12,357 crore for compensation of borrowings on the market and leaseback leases for plane; and Rs 13,446 crore for compensation of different dues and liabilities.
The enormous quantity of debt carried by Air India ensuing from years of loss-making operations was one of many key hindrances prior to now disinvestment makes an attempt by the federal government. During the final disinvestment course of, the federal government tweaked the bidding situations to permit potential bidders to position a bid on the enterprise worth — that means they may determine the quantum of debt they might wish to tackle.
Also, upon finalising the choice to promote its stake in Air India, the federal government, over the past two years, had stopped infusing funds into the airline and was as a substitute guaranteeing its loans.
