According to the budget documents released yesterday, the government has allocated Rs 62,057 crore to a special purpose vehicle (SPV), Air India Asset Holding Ltd (AIAHL), to house the majority of Air India’s debt. The government has also assigned Rs 1,944 crore to Air India to cover all losses incurred during the pandemic to clear the liabilities of the national carrier for handover to Tata Group’s subsidiary Talace Private Limited.
The total of Rs 62,057 crore allocated includes Rs 36,254 crore to repay government-guaranteed borrowings for Air India Ltd, Rs 12,357 crore for repayment of borrowings for sale and leaseback rentals for aircraft; and Rs 13,446 crore for repayment of other dues and liabilities.
Air India disinvestment was completed on January 27, including officially handing over its subsidiaries, Air India Express and 50% share in AISATS to the Tata Group.
Union Budget 2022-23 allocations to the aviation industry
In the Union Budget 2022-23, the government has earmarked Rs 600 crore towards reinvigorating the regional connectivity scheme. The budget for FY23 allocated Rs 10,667 crore for the civil aviation ministry, much higher than last year’s budget of Rs 3,224 crore. FY2022 reported higher expenses for the aviation sector, resulting in a revised expenditure of Rs 72,652 crore for 2021-22. A significant share of this expense came from Air India’s disinvestment process, especially the allocation for Air India loans, offering grants in aid to Air India for financial losses incurred during the COVID period, and Air India Assets Holding Company for repayment of past dues and borrowings of Air India.
“The proposal is to revive 20 airports and commencement of 90 RCS routes, viability gap funding for North East connectivity. A new scheme has also been formulated for providing aviation infrastructure to improve connectivity in NE region,” according to the Notes on Demands for Grants, 2022-2023.
Finance minister Nirmala Sitharaman also announced the official issuance of e-Passports with an embedded chip, which will be rolled out in 2022-23 as a part of the Budget FY2023 announcement. A week earlier, Minister of External Affairs S Jaishankar had confirmed that the government is in talks with India Security Press regarding issuing e-passports to citizens.