With the successful sale of Air India to the Tata group, Prime Minister Narendra Modi's government has restarted the long-stalled privatization program. Can it do a Vajpayee? Watch this report.
The long-awaited sale of India’s national carrier Air India is now done. The Tata group has snapped up the loss-making airline four years after the government announced its intention to sell it. Air India is now back to the Tata stable, 68 years after the government nationalized it.
Tata Sons’ enterprise value bid of Rs 18,000 crore with a cash component of Rs 2,700 crore was higher than the offer from a consortium led by SpiceJet Chairman Ajay Singh.
The acquisition gives the Tatas 141 planes and 900 slots at overseas airports, the most valuable of which are at London’s Heathrow airport.
While this is the end of a long wait for the Tatas, it also marks the start of Narendra Modi’s challenging privatization drive seven years after he first took office. The United Progressive Alliance government led by Manmohan Singh had not done any privatization in its 10-year rule. Modi is looking to carry on the legacy of Atal Bihari Vajpayee, who has a formidable track record of selling several state-run companies between 1999 and 2004.
Before we dive into PM Modi’s plans, let us first see how public-sector enterprises privatised by the Vajpayee government have fared.
The NDA government under Vajpayee managed to sell as many as 12 PSUs, despite strong opposition from within the government and the bureaucracy. A separate Ministry of Disinvestment under Arun Shourie had gone ahead with privatisation in the face of opposition from the Bharatiya Janata Party’s ideological parent Rashtriya Swayamsevak Sangh, or the RSS, and its various wings.
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