As the sale of Air India moves into the last stages with the bids having come in, it is important the transaction goes through without any further load on the country’s lenders. Thanks to the ill-conceived plan to provide regulatory forbearance to the Air India account, banks have lost a lot of money over the years.
The airline, which had accumulated losses to the tune of Rs 71,000 crore at the end of March 2020, must move to a strong promoter, capable of taking over the liabilities without further burdening the banks. Given the crores of rupees that have been pumped into the debt-laden carrier—much of it being taxpayer money—the state-owned lenders must not back weak promoters.
While identities of all bidders are not known, the Tata Group appears to be best placed to take over the airline. The government recently added a sweetener when the CBDT said buyers of the company would be allowed to carry forward losses—for eight years—and claim a tax rebate of up to 30% annually.
This tax-break is important because Air India has reported a loss in every year since 2007-08—when Indian Airlines was merged with it.