The trade of Air India to a private player has been in the futurity for a long time. AI was started by the Tata Group in 1932, but in 1947, as India gained Independence, the government bought 49 stake in AI. In 1953, the government bought the remaining stake, and AI was nationalised.

For the coming many decades, the public carrier dominated Indian skies. Still, with profitable liberalisation and the growing presence of private players, this dominance came under serious trouble. Ideologically too, the government running an airline didn’t relatively gel with the mantra of liberalisation.

By 2007, AI (which flew transnational breakouts) was intermingled with the domestic carrier, Indian Airlines, to reduce losses. But it’s the mark of how inadequately the airline was run that it has noway made a profit since 2007.

In fact, since 2009-10, the government (and laterally the taxpayer) has spent over Rs1.1 lakh crore to either directly make up the losses or raise loans to do so. As of August 2021, AI’s debt was Rs crore. Also, every fresh day that AI remains functional, the government suffers a loss of Rs 20 crore — or Rs crore per time.

he first essay to reduce the government’s stake — disinvestment — was made in 2001 under the also NDA government. But that attempt — to vend 40 stake — failed. As the viability of running AI worsened with every fleeting time, it was clear to all, including the government, that sooner or latterly the government would have to privatise the airline.

In 2018, during its first term, the Narendra Modi government made another attempt to vend the government stake — this time, 76. But it didn’t evoke indeed a single response.
The rearmost attempt was started in January 2020, and indeed though aeronautics is one of the worst megahit sectors due to the epidemic, the government has been suitable to eventually conclude the trade.

So how was it managed this time?
There were two main hurdles.

One, the bare fact that the government retained a partial stake. In other words, as long as the government kept a certain shareholding of AI, private players didn’t feel interested. That’s because the bare idea of government power, indeed if it was as little as 24, made private enterprises wonder if they would have the functional freedom demanded to turn around such a heavy loss- making airline. Unlike all the once attempts, this time the government put 100 of its stake on trade.
Two, the sheer mountain of debt on AI’s books, not to mention the ongoing losses. In the history, the government anticipated the stab to pick up a certain quantum of the debt along with the airline. That approach didn’t work. This time, the government let the stab decide the quantum of debt they wanted to pick up. These two factors made the difference.

From the government’s perspective, there are two ways to look at it.
One, it underscores PM Modi’s commitment to reducing the government’s part in the frugality; he can claim to have saved taxpayers from paying for diurnal losses of AI. Given the literal difficulties in AI’s disinvestment, or any disinvestment at all ( see table), this is a significant achievement.

Still, purely in terms of plutocrat, the deal doesn’t affect in as big a step towards achieving the government’s disinvestment target of the current time. Also, of the total AI debt of Rs crore, the Tatas will take care of Rs crore and will pay an fresh Rs crore in cash to the government. That leaves Rs crore of debt. The means left with the government, similar as structures,etc., will probably induce Rs crore. But that will still leave the government with a debt of Rs crore to pay back.
So, it can be argued that if the government had run AI well, it could have made gains and paid off the debts — rather of dealing the airline (that can make gains) and still be left with a lot of debt.

From the Tatas’ perspective, piecemeal from the emotional aspect of recovering control of an airline that they started, AI’s accession is a long- term bet. The Tatas are anticipated to invest far further than what they’ve paid the government if this bet is to work for them.