The interim Budget 2019-20 has allocated ₹2,600 crore to service Air india’s debt of about ₹30,000 crore which is to be parked in a Special Purpose Vehicle (SPV) created in October last year.

After the failed divestment of Air India, the government said that it will transfer the debt of the State-owned carrier to an SPV, Air India Asset Holding Limited.

The airline’s debt along with the government’s decision to retain a share in the carrier are said to be the two reasons for no entity participating in its divestment. The ₹2,600-crore allocation will take care of the interest liability of the SPV for a year. The interim Budget allocation for Air India comes a day after the government gave Ramesh Abhishek, Secretary Department of Industrial Policy and Promotion temporary charge as Secretary Civil Aviation.

The industry sees the developments to as serious attempts by the government about divesting its stake in the State-owned carrier. The interim budget also provides ₹1,084 crore towards payment for purchase cost and the modification of two Boeing 777-300 Extended Range aircrafts.

The Budget document provides a meagre ₹100,000 for Air India, down from ₹3,975 crore as per the revised estimates for 2018-19. The Budget allocation for the Airports Authority of India has seen a 23 per cent increase from revised estimates at ₹5,125.75 crore.

Related Topics