Air India equity infusion: Government taken to task by Parliamentary panel

The government was taken to task today by a parliamentary committee for not infusing the entire equity amount of Rs 8,574 crore in the current fiscal year in Air India as required by its Turnaround Plan (TAP), saying such shortfall would adversely affect its profitability.

Noting that only Rs 5,000 crore was infused in the national carrier as against the requirement of Rs 8,574 crore, it said, "Any delay or shortfall in the infusion of equity would adversely affect the implementation of the TAP and Financial Restructuring Plan (FRP)."

The Standing Committee on Transport, Tourism and Culture, in its report tabled in Parliament, said the shortfall caused by the latest allocation of Rs 5,000 crore would lead Air India to be "compelled to borrow short-term loans from banks in order to bridge the equity gap..., which may adversely affect the profitability of the company.

"In fact, one of the conditions under which the regulator (RBI) and the consortium of banks supported the FRP entails timely equity support to Air India by the government."

The panel, headed by senior CPI (M) leader Sitaram Yechury, said further equity infusion of the remaining Rs 3,574 crore would help Air India to implement TAP smoothly and carry forward the improved performance in the coming years.

It recommended that the government "should provide the promised equity infusion which has been accumulated, without any interruption during the course of the financial year."

The Committee also noted that despite labour unrests during the past year, Air India was "able to improve its performance notably both financially and operationally."