Twenty years,full circle

The government has replaced the chairman of the struggling airline,Air India,with a bureaucrat: Arvind Jadhav will have to hand the airline over to the civil aviation secretary,who will be assisted by a joint secretary from the same ministry who will serve as managing director. Definitely,something needed to be done to stem the rot at Air India,which has losses that totalled Rs 20,000 crore early this year — as well as debt worth Rs 40,000 crore. Yet the methods the government has used at every point in its futile quest to revive a company that has outlived its usefulness reveal that UPA 2 seems to have given up on whatever post-1991 instincts it possessed,and instead returned to the comfort of a licence-raj era mindset.

Consider the many arguments that are delivered in support of Air India from the government,and the many facets of what has led Air India to this pass,more in debt than it can hope to repay. For example,that it is a “national carrier” — implying that the private companies,nimbler and more efficient,which have rendered it redundant are somehow less Indian,and less worthy of representing India. That its debts are backed by an implicit state guarantee,meaning that its creditors have lent to it long beyond the point any real company would have been forced by impersonal market forces to go under as punishment for inefficiency and mismanagement. That it can use state resources with impunity — for example,by getting fuel on credit. The oil companies tried to put a stop to that last week,citing Air India’s abysmal creditworthiness,but the civil aviation ministry’s company insisted that the petroleum ministry’s companies not ask the nasty questions that two companies should ask each other — and UPA 2 backed Air India up,restoring fuel supply. Meanwhile,calls have grown that the state use its power over policy to ensure Air India’s continued survival in spite of its apparent lack of ability to turn a profit or provide a decent service: some have argued,for example,that the government push for it as the sole member from India in international airline alliances,or that it be perennially granted profitable routes,insulated from competition.

In allowing this narrative to take hold,the UPA government has demonstrated how,20 years after Manmohan Singh’s reform budget,the government has effectively stopped living by its principles. In spite of Dr Singh’s own inclinations,his government seems to give in to a statist,controlling impulse at the slightest provocation.