Air India privatisation to proceed
The Indian government is set to announce the qualified bidders for the privatisation of Air India (AI) today.
The government has extended the expression of interest period several times due to the COVID-19 pandemic, which has disproportionately throttled the aviation industry worldwide. Since 2017, previous attempts at selling AI failed to attract buyers. Then, in 2019, the government announced that it would retain a portion of the firm’s debts after privatisation, in order to bolster its appeal to investors and increase the likelihood that the business will recover under private ownership. Interested suitors include the Tata Group conglomerate, which is favoured to acquire the company.
Concluding AI’s sale will be a significant victory for Prime Minister Narendra Modi’s privatisation agenda, which aims to limit public sector undertakings to four key sectors: coal, banking, transportation and infrastructure. In doing so, Modi hopes to raise India’s prospects for future economic growth. Expect a further wave of privatisation in a range of sectors including pharmaceuticals, energy, construction, steel and electronics. However, if this program is to succeed in delivering growth, the government must also address India’s lingering demand shortage. But with decreasing tax revenue, expect New Delhi to be wary about fiscal stimuli.
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