The state-run operator of aviation facilities had proposed to finance its expansion projects investing last year’s profit.
The government has rejected the request from Airports Authority of India to exempt them from paying a dividend. The state-run operator of aviation facilities had proposed to finance its expansion projects with the funds.
The Centre has asked AAI to harness its cash reserves instead of using last year's profits, as per an Economic Times report.
The government is struggling to meet fiscal deficit targets.
The New Delhi-based AAI manages 125 airports across the country including 18 international airports, 78 domestic airports and 26 civil enclaves at Defence airfields as well as Customs Airports. Concerning the capacity constraints at the airports, the authority had chalked out capacity induction plan. It had also earmarked a part of its earnings for the same.
But in November, the committee on the management of government investments in central public sector undertakings had rejected the exemption demand and asked the authority to use its cash reserves of over 5,000 crore for the investment plans.
AAI is investing Rs 2,000 crore in FY18, and has plans to spend Rs 2,500 crore and Rs 4,000 crore, respectively, over the next couple of years for capacity enhancement. These plans could be affected if AAI would be asked to pay substantial dividends in coming years as well.This has raised the concern for the authority and the officials hope that the rejection does not impact capacity creation at airports. Talking to ET, an AAI official said that the aviation ministry had also supported the exemption demand, but the proposal has now been rejected. Thus, the authority will have to pay the profits as dividend, added the official.