Interim budget gives boost to AI holding company

In an apparent bid to strengthen Air India's financial position, the government substantially increased the allocation for its holding company, NACIL, by about Rs 4,029 crore in the interim budget.

In fact, almost the entire increase in the allocation for the civil aviation ministry was cornered by the National Aviation Company of India Limited; it was earmarked Rs 8,165.64 crore (Rs 81.66 billion) as against the revised estimate of Rs 4,136.89 crore (Rs 41.37 billion) for 2008-09.

The ministry received a total allocation of Rs 12,164.76 crore (Rs 121.65 billion), compared with the revised 2008-09 estimate of Rs 7,490.06 crore (Rs 74.9 billion), a hike of almost Rs 4,675 crore (Rs 46.75 billion).

The move came in the backdrop of Air India seeking enhancement of its equity and a soft loan to meet the growing expenditure on its ongoing aircraft acquisition programme; it is in the process of buying 111 planes.

However, the amounts earmarked for state-owned firms like Pawan Hans Helicopters Limited, Hotel Corporation of India and Air India Charters Limited showed a decline in comparison with the budgetary allocations made last year.

A provision of Rs 4 crore (Rs 40 million) for salaries and other administrative infrastructure was also made in the ministry's non-plan budgetary allocation for the newly-created Airport Economic Regulatory Authority, whose chairman and two members are yet to be appointed.

Air India was also earmarked Rs 620 crore (Rs 6.2 billion) for operating the Haj charter flights to Saudi Arabia.

The Airports Authority of India's allocation grew from a revised expenditure of Rs 2,667.43 crore (Rs 26.67 billion) to Rs 3,244.96 crore (Rs 32.45 billion). It received another Rs 89.15 crore (Rs 891.5 million) for upgrading the Jammu and Srinagar airports and for operational improvements of airports in the north-east and the crucial areas of Leh, Port Blair, Agatti and Puducherry.

Keeping in view the threats to the aviation sector, the government substantially enhanced the allocation for the bureau of civil aviation security from the 2008-09 revised estimate of Rs 9.93 crore (Rs 99.3 million) to Rs 23.54 crore (Rs 235.4 million). This provision was made for procuring equipment, accessories and civil work to be carried out in connection with the construction of its office accommodation and other areas, the budget document said.

The allocation for the directorate general of civil aviation fell from the Rs 93.95 crore (Rs 939.5 million) revised estimate to Rs 84.86 crore (Rs 848.6 million). The PHHL's allocation declined from last year's budget allocation of Rs 123.80 crore (Rs 1.24 billion) to Rs 84.50 crore (Rs 845 million) and of AI Charters from Rs 634.50 crore (Rs 6.35 billion) to Rs 573.81 crore (Rs 5.74 billion); HCI remained stagnant at Rs 15 crore (Rs 150 million).