Why the Indian government has so far failed to sell companies like Air India and Bharat Petroleum

Air India is one of the few public sector entities that the Indian government has been trying to sell since 2001, but the government has yet to find a single buyer for the state-owned airline.

Air India is currently burdened with a lot of debt. Air India had a total debt of over Rs 70,686 crore in 2018-19.

The government came up with a plan to resell the airline in 2018, but this time it did not succeed because the government wanted to retain its 24% stake. That is why many investors are not interested in buying it.

Finally, in January 2020, the government announced that it was ready to sell all its shares in the international airline.

Indian company Tata’s interest in airlines

According to recent media reports, only two parties have expressed interest in buying it. One is Tata Sons and the other is Air India Employees Union and Interpus, an American investment company that wants to buy it together.

However, experts believe that Air India will not be able to find a buyer by the end of March this financial year.

Colonel Sanjay Jalka, chief executive (technical) of the charter flights service club One Air, told the BBC: “It is clear that the conditions imposed by the UPA and NDA governments are flawed. Were He listened to his advisers and did not pay attention to what the bidders said. That’s why the company’s sales process took so long. Although it could have been fixed earlier.

Kapil Cole, CEO of Asia Pacific Aviation for South Asia, expects the successful bidder to be announced by June and the transfer of private property by December.

“They are strategically committed and I think they will be able to sell it this time,” Kapil told the BBC. He has taken care of a lot of loans and he has also accepted that the bid will be at the expense of the enterprise.
India’s failed ‘disinvestment’ policy

It is not limited to Air India for which the government has had to work so hard to find a buyer, but India’s disinvestment policy has been like a flop show. The government has only twice met its disinvestment target in the last 12 years.

Disinvestment is a process in which the government raises its funds by selling the assets of public sector units (PSUs) under its control. Governments do this to reduce the gap between their spending and revenue.

In the last financial year 2019-20, the government’s target of Rs 14,700 crore was less, in that financial year its target was to collect Rs 1.05 lakh crore.

Investors who are willing to invest in it also find it difficult for these reasons. So they have to sell these units completely.

The fiscal year 2020-21 is coming to an end on March 31 and the government has set a target of Rs 2.1 lakh crore for the current financial year out of which it has managed to collect only Rs 28,298.26 crore.

The government has so far sold its stake in India Aeronautics, Bharat Dynamics, Mazagaon Dock ship Builders, and IRCTC, according to figures from the Department of Investment and Public Assets Administration.

In July last year, Finance Minister Nirmala Sitharaman had said that the Union Cabinet had allowed the sale of 23 PSUs. These include Bharat Pumps and Compressors, Cement Corporation of India, India Fluorocarbon, Bharat Earth Movers, and Pawan Hans.

The government also plans to sell the public listing mesh to Life Insurance Corporation (LIC). The government also plans to raise Rs 90,000 crore by selling shares of IDBI Bank.

Leave a Reply

Your email address will not be published. Required fields are marked *