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New Delhi:

Taking a tacit dig at the employees of national carrier Air India, Aviation Minister Ajit Singh today said that everyone in the government thinks that they are 'Maharajas'.

Speaking at the 85th Annual General Meeting of Ficci in New Delhi, the minister, however, said that this attitude is changing.

"Employees of Air India used to think that they are the 'damads' (sons-in-law) of 'sarkar' (government), and whatever happens to Air India they will not be impacted, he said, adding that "our Maharaja (Air India) and all the Maharajas (referring to Union Minister of Power Jyotiraditya Scindia) in India are in the same state as far as finances are concerned".

Addressing industry concerns over high tax levied on aviation turbine fuel (ATF), Ajit Singh said the tax varies from 4 per cent to 29 per cent, and that his ministry is in talks with the Finance Ministry to rationalise the same.

High tax on ATF has been a big cause of worry for the industry for quite some time now, and is said to be the primary reason for spiralling costs the airlines incur to run their day-to-day operations.

The average tax on ATF in India, which at present is 24 per cent, is the world's second highest, next to Bangladesh, where the same is 27 per cent.

Airlines in India have been demanding to bring ATF under capital goods category so that the tax on ATF is fixed at 4 per cent across the country.

A spike in the price of crude, contributed largely by the depreciation of rupee, has made the cost on fuel around half of an airline's total expenditure. This is an increase two-fifth of the total cost a year earlier.

"Chhattisgarh government reduced ATF tax to 4 per cent and the air traffic went up by 16 per cent," Ajit Singh told industry captains at the Ficci meet, reiterating that his ministry is in talks with the Finance Ministry to rationalise the taxes.

Speaking on the financial health of Air India, the minister said, "Finance Ministry had earmarked Rs 10,000 crore to the airline sector in the Budget, but it is yet to disburse the full amount."

The aviation sector is under stress across the world, and particularly in India it is under tremendous pressure, he said.

"In India, no bank wants to have an exposure in the aviation sector. No bank wants to lend money to the aviation sector even for working capital. Cumulatively, the aviation sector lost about Rs 10,000 crore last year, and around 6,000 pilots are jobless at the moment," he said.

However, on a positive note, he said that the sector is bound to make a comeback.

On the issue of foreign investment in India's cash-strapped airlines, the minister said, "Money has no border and colour ... Money from outside or inside doesn't matter as long as it creates infrastructure."

Under the changes brought about by the government in the FDI norms in September, foreign carriers were allowed to pick up stake of up to 49 per cent of paid-up capital in domestic airlines.

Earlier, FDI of up to 49 per cent was allowed in Indian carriers but foreign airlines were barred from investing in air transport services.

Apart from the airlines, 49 per cent FDI was allowed in cargo handling, 75 per cent in business aviation and 100 per cent in greenfield airports, seaplanes and other areas.

In spite of this policy, the total FDI inflow into the air transport sector between January 2000 and April 2012 was merely $434.75 million, which was 0.25 per cent of the total FDI inflows into the country.

Story first published on: December 15, 2012 17:07 (IST)

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