(Reuters) - The Indian government has sought parliament’s approval for an equity infusion of 23 billion rupees ($328.42 million) in state-owned carrier Air India, according to a government document released on Thursday.
The government is also keen to pump in 8 billion rupees for Air India Asset Holding, a special purpose vehicle set up to privatise the ground handling transport business of the state carrier, stated the document that was tabled in parliament.
A top civil aviation bureaucrat said in September that a $120 million capital injection for Air India was on the way, and the government was working on a relief package for the airline industry.
In the current financial year ending March 2019, the government will be spending nearly 107 billion rupees to keep the national carrier operational.
Air India had sought 21.21 billion rupees of additional equity from the government for the fiscal year 2018-19 to make pending payments to its vendors, a source at the airline had told Reuters in July.
The government had sought parliament approval in July to inject 9.8 billion rupees ($142.87 million) in the ailing carrier, after efforts to find a buyer for its 76 percent stake fizzled.
India shelved the plan to sell a majority stake in the beleaguered airline due to lack of interest from bidders.
The sale was key to Prime Minister Narendra Modi’s plans to help keep the fiscal deficit at 3.3 percent of GDP, a goal which is already under pressure from giveaways to farmers and other welfare benefits ahead of the 2019 general elections.
The airline, which had debt worth 487.81 million rupees as of March 31, 2017, has been kept afloat for years using taxpayer funds.
The government’s efforts to revive the airline has been a setback to the prime minister’s efforts to cement his credentials as a reformist.
Jet Airways, India’s largest full-service carrier, and Air India are struggling to stem losses in the world’s fastest-growing domestic aviation market, where competition is intense and fuel taxes are high.
India’s airline industry is forecast to lose up to $1.9 billion this financial year due to rising costs and low fares, according to consulting firm CAPA.
Air India was not immediately available for comment.
($1 = 70.0325 Indian rupees)
Reporting by Manoj Kumar in New Delhi and Chandini Monnappa in Bengaluru; Editing by Sunil Nair and Sherry Jacob-Phillips