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Government seeks 62000 Crore for Air India

Tags: National News

  • The Government has sought Parliament’s nod to infuse ₹62,000 crore as supplementary grant to Air India Assets Holding Limited (created for disinvestment of Air India and its subsidiaries), for debt and other liabilities of Air India.
  • Air India Assets Holding Limited is a Government Owned special purpose vehicle (SPV). This company holds Air India’s debt, liabilities and some non-core assets such as land and buildings (worth 14718 Crore). This company was set up to clean the airline’s balance sheet ahead of its privatisation.
  • Out of this 62000 Crore, 28844 Crore is the net liability on government after privatisation whereas the rest 33105 Crore includes interest liabilities toward working capital and aircraft loans, lease rentals, owings to oil companies and to the Airports Authority of India. This is what the Government has provided for in the supplementary demand for grants

Air India Disinvestment 

On 25 October 2021 ,Government of India signed an agreement with Tata Group for selling off its entire 100% share in Air India to Talace Pvt Ltd, a wholly owned subsidiary of Tata Sons Pvt.Tata Group .

The deal was of Rs 18,000 crore of which Tata will pay Rs 2,700 crore to the government and Tata will take over the Rs 15,300 crore of the Air India debt .

The Government of India was to clear the rest of the debt  of Air India.

To meet these requirements the government of India is seeking Rs 63,000 from Lok Sabha .

Special Purpose Vehicle (SPV)

  • A special purpose vehicle (SPV) is a legal entity created by a parent company but managed as a separate organization. It is designed to isolate the financial risk of certain assets or ventures of the parent company. Companies create SPVs to securitize assets, make it easier to transfer assets (in case of Air India disinvestment), spread the risk of assets or new ventures, or protect assets from risks associated with the parent company.
  • Its legal status as a separate company makes its obligations secure even if the parent company goes bankrupt.


Supplementary Grant

  • Supplementary grant is the amount needed when the amount authorised by the Parliament through the appropriation act for a particular service for the current financial year is found to be insufficient for that year.
  • These grants are presented and passed by the Parliament before the end of the financial year (1st April to 31st March)
  • Constitutional Provision: Article 115 pertains to supplementary, additional or excess grants.

Appropriation Act - 

  • Through this act, the government gets the power to withdraw funds from the Consolidated Fund of India for meeting the expenditure during the financial year.
  • As per article 114 of the Constitution, the government can withdraw money from the Consolidated Fund only after receiving approval from Parliament.
  • The Appropriation Bill is introduced in the Lok Sabha after discussions on Budget proposals and Voting on Demand for Grants.
  • The defeat of an Appropriation Bill in a parliamentary vote would lead to the resignation of a government or a general election.
  • Both the Finance bill and Appropriation bill are classified as Money bills but while the Finance Bill contains provisions on financing the expenditure of the government, an Appropriation Bill specifies the quantum and purpose for withdrawing money.

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