Cash-strapped Air India has got Rs 1,000 crore from the National Small Savings Fund, and may raise Rs 500 crore from banks by next week.
ThePrint asks- Air India gets ₹1000 cr from Small Savings Fund: Wasting public money or last-minute push?
Announcing tit-bit packages will not help Air India
National Co-Convener, Swadeshi Jagaran Manch
A comprehensive revival plan to resurrect Air India is the need of the hour. Announcing tit-bit packages time to time will not help. Prima facie, I have no objection in using resources from the National Small Savings Fund to revive the ailing airline. But the bigger question that I feel needs to be addressed is whether Air India can rebuild itself with this amount. In my opinion, it cannot do so.
Then, why come up with this plan? In fact, these half-baked plans are doing more harm to the carrier than help it in restructuring.
I would have had no problem with the source of the fund if it could revamp Air India, but this Rs 1000 crore won’t be of any help in turning it around.
We all need to come out with a concrete plan. We need to do a thorough analysis of what went wrong and accordingly chalk out a plan. The ill health that Air India is in today is due to the wrong and corrupt decisions of the previous government, which include purchase of aircraft, chalking out routes without any study and even the merger.
The piling up of debt is due to the misdoings of the previous government. It is a huge issue and Air India is under tremendous stress at this point. It needs to be revived but I don’t think we are moving in that direction.
No harm in dipping into National Small Savings Fund to rebuild Air India
Captain N.K. Beri
Senior Commander, Air India
The decision to infuse Rs 1000 crore in Air India is an extremely positive step by the government. There is no harm in dipping into the National Small Savings Fund (NSSF) to rebuild Air India. Every penny counts at this juncture. Gradually, the financial health of Air India is improving and there should be no fear from any quarter. This money will only help in further improving its health. Once it is back to a position of strength, the return on this will also be healthy.
Whenever the government has to chalk out a bailout package, it has to garner resources from somewhere. So, why this confusion?
That apart, the small savers’ money in the NSSF schemes has government backing.
After all, Air India is the national carrier – it was associated with national pride. It has served the nation for many years. It has run into trouble due to the decisions taken in the political quarters, so how can anyone blame the employees? The government must ensure that the airline is not only revived but its past glory also brought back, and this can happen with government support.
Now, let’s also understand if this situation had arisen in any other country – where the national carrier got into a huge debt crisis – would not the government provide support? It would and rightly so. So, why keep pondering whether the government should or should not help Air India?
It’s our hard-earned money & that’s now being used on a bust airline
Managing Partner, Asset Managers
The decision to use NSSF corpus is bit of a rude shock. The schemes under NSSF are meant for small savers and essentially the corpus is built with their savings.
At the outset, let me say that the small savings schemes are government-backed and so your money is safe. Now having said that, should the government just use the funds as and when it wants and for whatever it wants?
The government has been trying for years to revive Air India. It has also tried to privatise the airline. The efforts did not fructify. So, why decide now to use the money that belongs to millions of small savers to try and revamp an airline?
It is our hard-earned money and that is now being used on a bust airline. The fact that Air India has failed is not a small savers’ problem. Why should their money go down the drain? It is frustrating for them to be silent watchers.
It is time to wake up and smell the coffee. It is almost a given that this package will not help in reviving Air India. There is no logic, therefore, for the government to dip into the NSSF to bail out a failed airline. This is bad policy.
Expenditure like paying fuel & maintenance bills can be taken care of by this funding
Aviation Expert and CEO, Martin Consulting
When the government decided to privatise Air India and go ahead with major disinvestment, it made matters worse for the airline. Now, it is in a position where it is struggling to manage even day to day expenses. A single aircraft part can cost up to a million dollar or more. The money it has received from the National Small Savings Fund (NSSF) will serve as a working capital, which can help put the airline back on its feet.
The Rs 1000 crore funding may seem like a meagre sum but it should definitely help it cope better. Expenditure like paying fuel bills, maintenance bills and PNL can be taken care of by this funding. This would help the airline generate profits and sustain itself better in the long run. In fact, I am certain that it will find itself in a much better position by the end of the next financial year because of this funding.
The major hit that rupee has taken vis-à-vis dollar is causing all airline businesses to suffer. But Air India still has a ray of hope in the form of international flights and the profits it can reap given the strong dollar. It isn’t as if it is flying empty seats – it has been doing well in international travel sector. So, this funding from NSSF should definitely boost the airline and help it sustain.
Using NSSF corpus to bail out Air India is a recipe for disaster
Associate Editor, ThePrint
The government, for a while, has been talking about coming up with a revival plan for Air India. Is this part of the revival package? Using National Small Savings Fund (NSSF) corpus to bail out Air India is nothing but an unmitigated disaster.
The government, until now, has been using Life Insurance Corporation (LIC) to bail out ailing public sector companies, including IDBI Bank. Now, it has turned towards NSSF, which has a corpus built through several schemes, such as post office deposits, Kisan Vikas Patra, National Savings Certificate, targeted primarily at the country’s middle class and those with small earnings.
The decision to use NSSF money to bail out the cash-strapped airline is perhaps guided by the government’s eye on adhering to the fiscal deficit target of 3.3 per cent in the current financial year. But is this the way to contain fiscal deficit? Adhering to fiscal deficit target by denting strong organisations is nothing but bad policy and economics. It is better to somewhat relax the fiscal deficit target rather than making decisions that are questionable.
More importantly, the Rs 1000 crore fund will not help the airline in its revival. Air India, with a debt of about Rs 50,000 crore, has been surviving thanks to a bailout package it was granted in 2012. So, the decision to infuse corpus accrued from small savings schemes is even more absurd.
By Mahua Venkatesh and Fatima Khan.