Reams of writings attempted to understand the Advaita of disinvestment as an economic policy instrument. For the last three decades, we are told that the disinvestment is a strategic weapon that governments deploy across the world to reduce the burdens on exchequer and realise the proceeds for larger public good. Anything that is government except the Government itself is approached with suspicion, be that is infrastructure, service, education, or even health.
Most of the vocal and otherwise thinking minds ate the fruit from Eden and started perceiving Satan in every public sector employee. A new breed of intellectuals made their careers with well oiled arguments defending the philosophy of disinvestment and joined chorus ‘business is not the business of the governments.’
The policy of disinvestment reached its pinnacle under the Modi dispensation. Modi’s oratory gimmick attributed an amazing ability to sort out the problems of governance to disinvestment. Given the way things are happening in India at present, it only shows that even the government of 56 inches chest has to prostrate before the market demigods. Whatever you may name it, the ultimate aim of policy prescription is to benefit the private capital at the expense of nation’s wealth. There are two examples before the country whose rationale cannot even defended by Adi Shankara, the demigod of Advaita philosophy. Let us consider those two examples.
Vodafone Idea, the third biggest cellular network in India reeling under Rs. 1.95 lakh crore debt burden, including Rs. 16,000 crores interest payable to government of India. Vadafone offered to allot 35 % equity share to government in lieu of interest burden. Central government is happy to do so. That too this happened when one of the country’s monopoly capitalist group Mahindra declared that he can’t set the Vodafone’s financial record straight and walked out of the joint venture.
The second case in question is Air India sale. As it is clear by now, the firm floated by Tata paid cash of Rs. 2,700 crores, to acquire full ownership of the nation’s premier flying company, Air India. The reserve price fixed for this sale is mere Rs. 12,906 crores for a firm that had 112 wide winged aircrafts, 24 narrow winged aircrafts, 4,400 domestic and 1,800 international flight landing and parking slots at various airports across the country. The central government wanted us to believe that only 7 companies thought of participating in bidding process, that too five were disqualified due to technical reasons. Only Tata’s business development team caught the imagination of policy makers and stood out as successful bidder! For this and for several other reasons, the Air India sale is filled with an air of suspicion. If one goes by reply dated July 21 to the Parliament by way of written reply, we have to believe that through this sale, the government realised full cost through this sale process. What is the cost of this deal to the nation’s exchequer, is the question. The nation was bombarded with commentary and even some editorials flayed the government for its failure to sell Air India.
On the completion of this sale, almost all the news makers commented that the prodigal son finally returned home. This is to remind the readers that the Air India was originally owned by JRD Tata and later it was nationalised in newly born independent India. Missing details in this narration is the fact that the Nehru government nationalised Air India only after paying due compensation to the promoters.
There are enough clues available in public domain that the central government, since 2018, consistently relaxed and revised the conditions of the sale to suit the interests of a selected bidder. Under whose behest these relaxations were granted is the core question the nation warrants transparent answers. Even before the commencement of sale process, while fixing the eligibility criteria, the committee of secretaries opined, as reported by Business Standard, that the government should not insist on negative net worth of bidders, if they are already in airlines business. It is noteworthy that all the airlines’ net worth, including Vistara owned by Tatas, was showing negative growth.
In 2018, the Air India’s outstanding debt was Rs. 33,392 crore. Surprisingly, within the span of a year and a half, the outstanding debt rose to Rs. 61,562 crores by August 2021! That means, Air India’s accumulated debt for about 68 years was only Rs. 33,392 crores and in just two years it accumulated additional debt burden of Rs. 28,170 crores! This single point itself proves who is best manager of the public assets. What the nation is told that, is that once the sale is effected, the government will realise handsome amount which will be useful to offset the debts at least, if not making profit from the sale. As on sale date, the outstanding debt stood at Rs, 61,562 crores by August 2021. Surprisingly, once the decision to sell is finalised, on the pretext of making the bid attractive for the prospective bidders, the government simply floated an Air India Asset Holding Company and transferred 50 % of Air India’s consolidated debt to this asset holding company. This simply reduced the amount to be realised from the sale deed to half of actual amount.
When the sale process was initially conceived, it was decided by the Cabinet committee on Economic Affairs that the government will retain 26 % stake in the company and only 74 % is proposed to put up for sale. It was also decided that the successful bidder has to take over 70 % of Air India’s debt. Stating no bidder expressed interest, in the year the government altered the conditions of sale, the government took two contentious decisions. Firstly, government put up 100 % of the stake on sale. Secondly, it gave discretion to the bidder to chose to what extent it would take the quantum of debt! After giving these two key concessions, the qualified bidders are asked to present their financial plan. The government also got parliamentary nod to spend Rs. 62,057 crores to clear all outstanding dues and liabilities of the Air India. That means, the share at stake has gone up by 25 % but the cost of the bid stands same.
This brings us full circle. First government reduced the cost of the bid by half, thereby imposing a burden of about Rs. 30,000 crores on the exchequer. On the other hand, instead of repaying the outstanding dues from sale proceeds, government cleared all dues by spending Rs. 62,057 crores from exchequer. If we add both these, to off load the Air India to Tata, government had holes in its finances to the tune of staggering Rs. 92,000 crores! The story does not end here. The Tata’s got commitment from the public sector banks consortium, a loan of approximately Rs. 33,000 crores at the interest rate of mere 4 -5 percent. One must remember that Air India till now paid 9 % interest rate on its outstanding debts. But the public sector banks are willing to grant loan at the servicing charge half what they charged from the public sector undertaking. Thus, the series of concessions offered to the successful bidder is nothing short of scam which needs to be thoroughly and impartially looked into by nothing short of a Joint Parliamentary Committee.
*Author is freelance writer, former member, central working committee, All India Agricultural Workers Union
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