New Delhi: The Confederation of Indian Industry (CII) said Monday that the privatisation of national carrier Air India sends out a clear message to the markets and global investors that the Centre has the political will to bite the reform bullet. The CII said the time was right to expedite disinvestment efforts in the banking space, with privatisation of identified two public sector banks.
“Air India’s successful sell-off, albeit after multiple efforts, will infuse a fresh vigour to the ambitious plan of disinvestment and privatisation of public sector enterprises,” CII director general Chandrajit Banerjee said. He stated that the Air India deal will help embolden confidence in the government’s capacity to close transactions and thus encourage bidding in future sales.
“This impetus was much required as government is lagging in its disinvestment plans with only around 5 per cent of the annual target laid out in the Union Budget met so far till August 2021,” said CII.
The government October 8 had announced that salt-to-software conglomerate Tatas have won the bid to acquire debt-laden national carrier Air India for Rs 18,000 crore.
This includes a cash payment of Rs 2,700 crore and taking over Rs 15,300 crore debt. The deal, which is expected to be completed by December-end, also includes sale of Air India Express and ground handling arm AISATS.
The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including two PSU banks and one insurance company, during the current financial year. The amount is lower than the record target of Rs 2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.
In her Budget speech February 1, Finance Minister Nirmala Sitharaman had announced that the Centre proposes to take up the privatisation of two public sector banks (PSBs) and one general insurance company in the year 2021-22.
The chamber said the Air India sale marks a watershed event for the policy discourse on disinvestment and privatisation in India.
“The successful privatization of Air India marks a momentous event and sends out a clear message to the markets and global investors that the present government has the political will to bite the reform bullet,” said Banerjee.
“The move also amply demonstrates the trust which the government reposes in private sector by bringing them centre stage with its bold privatisation programme,” Banerjee added.