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Govt hikes aviation sector allocation by 64% to Rs 12,000 cr

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BS Reporter New Delhi

The Government has raised the target of internal and extra budgetary resources(money which will be raised through loans by companies or through reinvestment of profits)  which will be raised by public sector undertakings under the ministry of civil aviation  by over 63.5 per cent from Rs 7320.06 crore in the revised estimates of 2008-09 to Rs 11974.76 crore in 2009-10

The cash will be used mostly to fund the aircraft acquisition program of the financially ailing National Aviation Company of India Ltd(NACIL)-which runs under the Air India brand and also the Airport Authority of India which is undertaking expansion of airports in Kolkata and  Chennai amongst others.

 

As a result  the  outlay of the ministry has gone up substantially from Rs 7,490.6  crore in the revised estimates of 2008-9 to 12,164.76 in 2009-10 a jump of over 62 per cent.

The government in its budget documents has admitted that the plan allocation of the ministry has been enhanced in order to meet the expenditure on account of enhanced competitiveness of Indian carriers for international operations, cost of a media campaign and for capacity building measures for enhancing effective management and control in the field of aviation.  

NACIL is making an investment of over Rs 40,000 crore to buy over 118 aircaft and is of course in dire need for loans to fund its acquisition of new aircraft. The Air India management has been looking for a bail out package to get the corporation out of the woods which includes a combination of expanding its small equity capital base( Rs 140 crore) and also to raise loans from the market.

In the budget documents the IEBR target sanctioned for NACIL has nearly doubled  from Rs 4136.89 crore in 2008-09 to Rs 8165.64 in 2009-10 crore. The money will of course be used primarily to partly fund the new aircraft acquisition program, in which 48 aircaft have already been delivered . Air India is expected to take deliveries of around 30  aircaft this year for which payment has to be made . However the government has made no allocation for any budgetary support for the airline-which means there is no provision for infusion of fresh equity in Air India.

The IEBR  for the Airport Authority of India has also been increased substantially by over 22.5 per cent from Rs 2567.18 crore in the revised estimates of 2008-09 to Rs 3145.81 crore in 2009-10. The money will be used to fund AAI ambitious expansion projects -one of the Kolkata airport for an investment of Rs 1942 crore and for Chennai with an investment of Rs 1808 crore. The Government had decided-due to opposition from the left-not to privatise the two airports as they had done in Delhi and Mumbai.

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First Published: Jul 07 2009 | 2:50 PM IST

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