Most assume a bailout package involves a huge payout from the government. It may not. A good example of this is the proposal put forward by Kingfisher Airlines chief Vijay Mallya. Like most others, the airline is bleeding, and Mallya has made the usual demands for reduction in taxes and has got the government to grant him time to pay off his dues to state-owned oil companies.
Mallya’s bigger demand, however, is that aviation policy be changed to allow foreign airlines to buy a stake in Indian airlines — under the law, only non-airline firms can buy up to 49 per cent in Indian carriers. Changing this policy may help bailout Mallya and other Indian airlines, but what has to be kept in mind is that the policy itself is a fairly ludicrous one. The purpose of allowing FDI is to improve the quality of the Indian offering for Indian consumers, primarily.
Surely Indian consumers will benefit more if Singapore Airlines buys into an Indian airline as compared to a hypothetical case when Temasek does, given the airline experience Singapore Airlines brings to the table. Once you analyse the details in each sector, you will find a large part of the problem Indian companies are facing are due to illogical government policy. In which case, asking for a bailout is not necessarily about asking for a favour, it is about asking to remove a dis-favour.
Sanjay Sethi, Mumbai