Cash crunch due to a high fiscal deficit has held back infusion of equity of over R3,574 crore in Air India, official sources said on Wednesday. Equity infusion “could be delayed but not denied”, the sources said, adding that in the meantime, Air India could contemplate taking loans from the market to meet its immediate requirements.
The airline was considering sale of land, including the one near Connaught Place in Delhi, which was estimated to be worth R700 crore, the sources said. The finance ministry has decided to put on hold the equity infusion on grounds of lack of funds due to the high fiscal deficit and the falling rupee, they said.
The amount is actually due from the previous fiscal as the government had then infused only R5,000 crore instead of R8,574 crore as planned earlier. The government had earlier been rapped by a parliamentary panel for not infusing equity in a timely manner in the last fiscal.
“Any delay or shortfall in the infusion would adversely affect the implementation of the turnaround plan and financial restructuring plan,” apart from denting the airline’s profitability, the Standing Committee on Transport, Tourism and Culture had said in its report in May.