Air India seeks govt aid on interest front

New Delhi: Air India is going to ask the government to bear a part of the interest burden, arguing that the Centre failed to provide adequate equity infusion. In addition, the ailing national carrier is seeking a sovereign guarantee to help lower the interest cost.
According to the bailout plan, AI was to get Rs 11,000 crore last fiscal but got about Rs 3,500 crore less, said a senior official. This year, the airline has got an equity infusion of Rs 5,000 crore as scheduled, but the gap remained. This is part of the Rs 30,000 crore that has to be given to AI over nine years.
The rising fiscal deficit has forced the government to tighten its purse strings. "We will seek a sovereign guarantee from the state to enable us to raise the balance funds from the market. Unlike equity, hefty interest will have to be paid now to raise Rs 3,500 crore and we will ask the government to subsidize the interest cost. This money is required to pay our outstandings," said a senior official.
Read news in full 03/10/13 Saurabh Sinha/Times of India