The report of the CAG, presented to Parliament a few months ago said “this (the decision to purchase 68 aircraft at a cost of Rs50,000 crore) was a recipe for disaster and should have raised alarm signals in the ministry of civil aviation, Public Investment Board and the Planning Commission"
It has been seven years since India’s aviation icon was metaphorically shot down in mid-flight. And the Maharaja it still lying crash-landed, his glorious moustache stuck in muck and legs kicking feebly in the air.
The first job that Ajit Singh, the new civil aviation minister, will have to take up is to get Air India flying high again, supported by a sound financial position.
Equally important, Mr Singh will have to identify those responsible, from minister to joint secretary, for sabotage of Air India. He has to make sure cases are filed against these people, charging them with anti-national activity and destruction of national property, amongst other things.
The prime accused stands out: he is Praful Patel, who was civil aviation minister in 2004.
Mr Patel maneuvered himself into post of civil aviation minister using the clout of his mentor Sharad Pawar. The fact that, till he became minister, he was a director of Jet Airways is a clear pointer to why he got himself into this particular ministry. What about the concept of conflict of interest? That’s only for credulously innocent and straight-forward people.
Prime minister Manmohan Singh could, to give him the benefit of doubt, only watch helplessly and get all of Mr Patel’s decisions rubber-stamped by the Cabinet.
Mr Patel set about his task quickly. Four months after taking over, he chaired a meeting to discuss Air India’s expansion plan to buy 28 aircraft to replace the ageing Jumbos. Mr Patel’s diktat at the meeting was that Air India would buy not 28 aircraft but 68—at a stupendous cost of Rs50,000 crore.
The report of the Comptroller and Auditor General of India (CAG), presented to Parliament a few months ago said “this was a recipe for disaster and should have raised alarm signals in the ministry of civil aviation, Public Investment Board and the Planning Commission".
The inflated purchase order was not backed by either a viable revenue plan or expansion of routes. Indian Airlines, too, was asked to revisit its proposal to buy 43 aircraft but it refused.
On 5 August 2004, the minutes of the meeting were sent to V Thulasidas, then CMD Air India by an under-secretary in the ministry called K K Padmanabhan. The minutes ordered that "Air India should revisit the proposal of aircraft purchase and submit a fresh project proposal to the government at the earliest which could include the revised requirements." Mr Thulasidas agreed to revise the proposal despite strong opposition from V Subramaniam, additional secretary and financial adviser of the ministry.
The entire acquisition (for both Air India and Indian Airlines) was to be funded through debt (to be repaid through revenue generation), except for a relatively small equity infusion of Rs325 crore for Indian Airlines.
Mr Patel's controversial decision was rubber-stamped by a committee of secretaries and a group of ministers. Air India is still saddled with debt of more than Rs40,000 crore and an estimated loss of around Rs7,000 crore. Till the 2003-2004 fiscal, AI was making a profit of around Rs105 crore.
The CAG report said the aircraft acquisition through debt "contributed predominantly" to the airline's massive debt liability, which stood at Rs38,423 crore as on 31st March last year. CAG also called the merger of Air India and Indian Airlines "ill-timed" and said that "the financial case for the merger was not adequately validated prior to the merger".
Having done his dirty work, Mr Patel moved on to the industries ministry. Air India was left to sink in the mud till a few months ago when a rescue plan was mooted. Bankers and bureaucrats are running round and around trying to save Air India.
In 1985, when Rajiv Gandhi came to power, he appointed rookie P Chidambaram as deputy minister for textiles. Within a week he was moved to the home ministry in a junior post.
It was reported that Mr Chidambaram had told Rajiv Gandhi that his family owned a few textile mills and there would be conflict of interest if he stayed on in the textiles ministry. Mr Chidambaram was an honest young man then.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
Fiercely independent and pro-consumer information on personal finance.
1-year online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
Complete access to Moneylife archives since inception ( till the date of your subscription )
Read Reminder to Prime Minister on ATR - Rajya Sabha Committee Report on Merger of Air India - Indian Airlines into NACIL -The committee firmly believes that the one and only way of overcoming the problem is to change the often irrational and...
https://groups.google.com/forum/#!topic/right-to-information-act-2005/1Aguht0VFg8
This can be done by UPA without even Lokpal.
But If we are ruled by a deaf and dump who is guided by looters...what to do ?
Let us prey the God to die early from this bullshit country...
The facts are there that while Air India for decades had been running dry and on losses, no one has the guts to cut down the union power of all employees. It is a joke in the aviation trade that only nation with maximum employees and yet neither any productivity nor any respect for the passenger is Air India.80% of businessmen prefer and travel with foreign carriers because of lack of any service and rude treatment.
The inquiry will be a white wash for the nation.
Sooner or later it will have to either sell it or close down. It is dead horse and thus Lok Pal wnats to prove its power
Lastly, the master strategists in the Congress managed to add reservation and also a few other unwanted items to the Lokpal draft and have ensured it does not pass. They have also ensured that it will not come to vote due to this very reason and they will now expect that the fallout of not passing it will not affect their election results when elections do happen.
All politically aware Indians know that our politicians, when ordering payments to an ordinary Indian who loses his life in a train accident or fire etc., can barely think of a sum larger than Rs. 1 or 2 lakhs. But, when it comes to doing business (like the Air India order), they can only think in terms of thousands of crores. We all know the potential for mischief present in such large orders. Most politicians have lost all pretensions of morality. They will do their best to kill the Lokpal bill.