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Could be wise to write off some Air India debt: Arvind Panagariya

Thursday, August 10, 2017

Outgoing Niti Aayog Vice Chairman Arvind Panagariya has said that writing off some debt of Air India, so as to make it attractive to prospective investors, could be a "wise" move. Following a suggestion by Niti Aayog, the government is endeavouring to privatise the state-owned carrier and a committee has been set up under Finance Minister Arun Jaitley to carry forward the process.

"I don't know whether you need to write off debt to find a buyer, I don't know the market.

Transaction advisers are competent on that," Panagariya told PTI in an interview. "I am just saying that it's probably wise to write off part of the debt before this happen (privatisation of Air India)," he added.

On whether there is need for a asset stripping before sale of national carrier, he said, "No, why would you do asset stripping. It's a well running, well functioning Airline." Panagariya, who will leave Niti Aayog this month-end to  return to academia in the US, further said that there are details which need to be sorted out by the transaction advisers.

Citing provisional figures, Minister of State for Civil Aviation Jayant Sinha recently had said Air India's total debt stood at Rs 48,876.81 crore at the end of March 2017.

Out of the total amount, Rs 17,359.77 crore is aircraft loan, while Rs 31,517.04 crore is working capital loan.

"The rates of interest on aircraft/ working capital loans are linked to the respective bank's prime lending rates/base rate/libor plus margins prevalent at the time when these loans are taken," Sinha had said.

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