Govt seeks Rs 2,300 crore as equity infusion from Parliament for Air India

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26 Aug, 2025 12:21

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Finance Minister Arun Jaitley on December 20 sought additional grant of over Rs 2,300 crore from the Parliament to be infused as equity in debt-laden Air India.

Jaitley tabled second round of supplementary grants for 2018-19 in Rajya Sabha and sought Rs 2,345 crore as equity infusion coupled with Rs 1,300 crore as grant-in-aid for the national carrier.

According to figures from Air India, government has already infused close to Rs 1,600 crore as equity infusion during FY19.

Moneycontrol reported on December 6 that the government was planning further financial assistance for Air India.

Pradeep Kharola, Chairman and Managing Director, Air India, had told Moneycontrol that the government had initiated discussions regarding the same and that the quantum was being decided.

Additional equity infusion by the government reflects the Centre's U-turn in the process of privatising the carrier which had failed to generate interest among private parties.

Moneycontrol also reported on December 10 that the government had withheld the idea to privatise the airline.

“The divestment has been put on hold for the time being,” Kharola had told Moneycontrol.

He said that the divestment has been “temporarily” put on hold and may not resume anytime soon.

Centre had invited bids for its 76 percent stake in Air India by 31st May 2018. The bidding, however, saw no expression of interest (EoI) coming forward despite some airlines, including IndiGo, showing interest in its individual business.

The abysmal response from bidders nudged the government to change it's course of selling the airline as a single unit. Thus, under its current revival plan, the government has decided to sell non-core businesses through a special purpose vehicle (SPV).

According to the plan, the government will transfer debt worth Rs 29,000 to Rs 30,000 crore from the airline to the SPV which will be recovered by selling its non-core real estate assets.

Currently, the state carrier has debt worth Rs 55,000 crore and accumulated losses close to Rs 30,000 crore. After the transfer, Air India will have only Rs 26,000 crore as debt on its books of accounts.

According to Kharola, the government was watching the market scenario and would move ahead with the stake-sale only when macroeconomic fundamentals turn favourable for the airline.

"Since crude oil price is so high, it was thought that it was not the right time to divest it,” he said.

The CMD hopes that the revival plan would make Air India attractive for buyers in future.