The finance ministry has turned down a proposal from Indian Airlines to infuse Rs 325 crore for its fleet expansion.
The civil aviation ministry had sent a note to the ministry before making a formal proposal through the public investment board (PIB).
But the ministry has sent it back claiming that since Indian Airlines was on the verge of disinvestment, there is not much sense in pushing through the proposal.
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While the civil aviation ministry has been maintaining that it is yet to prepare a formal application to be processed by the PIB, the draft was sent just after the approval of the plan by the board of Indian Airlines to buy 43 aircraft in March this year.
Ministries often take recourse to this option before they float the formal proposal in cases which involve heavy expenditure.
The Rs 325 crore plan for the national carrier envisaged beefing up its equity to leverage loans from the market aggregating Rs 10,089 crore to buy the aircraft.
The finance ministry has said committing the sum makes no sense when the disinvestment process in the company is moving ahead.
Instead, it will be better to leave such plans to the proposed investor. The ministry has also said that the prices of the aircraft quoted in the proposal were applicable only till June 2002.
Accordingly, the same has been sent to the civil aviation ministry for further comments. The matter has now acquired political overtones and it is expected that the civil aviation minister will take that route to expedite the process.
Sources said the matter may be taken up at the interministerial level also to ensure that the finance ministry sees