Within the dominant political economic discourse, the command of the State over key and indispensable business sectors is seen as a legitimate instrument to establish the purpose of “the greatest good for the greatest number”.

Prior to the 1980s, the crucial enterprises, stretching from healthcare to highways building, were mainly run by governments. Then came the Ronald Reagan administration in the United States, and with it came the era of privatisation. 

On September 19, 1986, President Reagan hosts a ceremony in the White House Oval Office to commemorate his signing of the Omnibus Diplomatic Security and Antiterrorism Act on August 27, 1986. (White House photo) | Photo: US Department of State

In the opinion of the pro-privatisation camp, the switch from public to private sector leads to noteworthy and striking amelioration in the politico-economic matrix – increasing competition, improved efficiency, diminished political interference, and higher government revenues from sale.

The love and faith for privatisation has not, however, gone undebated. Opponents of privatisation allege that the change from public to private does not necessarily equate to progress, proficiency, and professionalism of the enterprise. 

In fact, they argue, that privatisation leads to monopolies, and affixes the component of profit in public interest works. Governments lose out on potential dividends, and have to confront the tricky problem of regulating private monopolies and even fragmentation of industries. 

However, it does not mean that the status quo is the best result either. The point here is that any privatisation by the government has to be backed by solid factors and reasons. Otherwise, the challenge and the ensuing outrage are inevitable.

But, India can’t afford a silly laissez-faire culture where the government and its regulators eschew their role as umpires between consumers and producers.

Selling off the Maharaja

On selling off public enterprises, there is a well-laid pattern that is being followed across the world – defund, demoralise, and privatise. 

Noam Chomsky, in his lecture The State-Corporate Complex: A Threat to Freedom and Survival says:

“… That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, you hand it over to private capital.” 

The continuing, deliberately brought about, discredit of “the Maharaja” is an exemplar of this pattern.

The case of India’s troubled national carrier, Air India, so formed, is not against the plan for strategic disinvestment or privatisation, but rather the giant cartel of corrupt politicians, crony foreign-dependent capitalism, immoral business lobbying, and a corruptible media.

An Air India Boeing 777-300ER departing from Paine Field in Washington state, United States | Wikimedia Commons

The deliberate and reckless privatisation of Air India is a reality check. In a free and vibrant democracy, the government cannot go the Robert Clive way, if it really believes that corruption is not an entitlement of power.

To better comprehend the case of the prima facie corrupt Air India deal, some historical context is important.

The whole idea to sell Air India comes in the heels of a period of wilful mistreatment by the State and a pattern of expediency shown by the government to ramshackle the national carrier of India. Maharaja, the glorious mascot of Air India, has been brought down to a trinket. 

It would nearly suffice to say that the title “national carrier” or the name “Air India” would look inconsistent and contradictory in private hands. Yet, this is what the government is bent upon doing.

The shift, in fact, precedes the current National Democratic Alliance (NDA) government. In the erstwhile United Progressive Alliance (UPA) regime (2004-2014) at the center, the national airline was methodically stripped of landing and other rights, whereas other private airlines were  allowed to  take over many of Air India’s thriving spots such as landing rights and profitable routes. 

Another issue was of the bilateral negotiations between the Indian and foreign governments, that fueled national security concerns. 

Furthermore, all the profitable routes of Air India were shut down by the erstwhile Civil Aviation Minister, Praful Patel, so that the other private airlines could get an edge and make profits on the cost of Air India decay. 

Additionally, the government unnecessarily bought aircrafts in large numbers from France, Brazil, and the United States, among others, that lay rotting inside hangars. Then, it was all sold as junk. Brand new planes such as the Boeing-777 were sold to Etihad at one-third the price they paid only two years ago. 

Etihad Airways, Boeing 777-3FX (ER) | Wikimedia Commons

A sketchy deal

The current grand deal begs a whole set of questions:

Why did the Ministry of Finance of the current government squeeze Air India funds? What’s the status of court’s probe order on Dr Subramanian Swamy’s plea of Air India plane purchase scam? Why was Air India making profits till 2004? Why is there no open auction?

Isn’t the selection of a foreign consultancy firm to valuate Air India a potential scam and against the principle of natural justice that is premised on the fact that ‘justice must not only be done but also must seem to be done’? Is the government trying to destroy evidence by selling it off? 

In this backdrop, the deal merits a microscopic look. 

Commercial aviation is a very important sector and has a far-reaching effects on a large country like India. For the benefit of the national integration process, people should be able to afford to travel its length and breadth. Better connectivity drives higher regional economic growth and promotes opportunities across the regions. 

The ‘Ude Desh ka Aam Nagrik’ (UDAN) is an initiative by the current government to make air travel to India’s Tier II and Tier-III cities affordable to the common man. 

The Prime Minister emphasised that the scheme would enable a person who wears a ‘hawai chappal’ to fly on the ‘hawai jahaj’ by reviving more than four hundred unused and under-utilised airstrips in the country’s vast hinterlands. 

Now, the grand sale of Air India exposes the inconsistency of the government’s intent. This has to be rationalised.

There has been an attempt to terminate Air India, but evidently, the airline is not dead yet.

The national carrier, which has recently handled a galore of relief and evacuation flights internationally amid the COVID-19 pandemic, has acquired notes of applause from several countries.

The airline has operated flights to evacuate Indians stranded in Japan, Milan, Rome, and China. It made two flights to Wuhan, the global epicentre of the pandemic. It would be interesting to see if a private carrier will have the sense of responsibility or capacity to carry out such operations.

The successive governments who ran the national carrier to the ground to a point where it wasn’t even attracting buyers should ponder over what they did. 

After learning from past mistakes and looking at the caliber of Air India flights to undertake emergency operations, this might be the right time for the government to rejuvenate and restore the past glory of the Maharaja and do away with the thought of privatising him.

The industry can be revived tomorrow, and fares can be cut down to one-third of what they are today, but only if the government plays its mediating role well.

Privatising one more ‘natural resource’

India started off with the Soviet style socialism, where the license and quota raj made corruption an entitlement. 

Later, through Soviet economic model, the government led by Nehru, enabled the black market for licenses and quotas, thereby triggering a disaster. This trend of corruption is now spreading to other sectors. 

And today, we see rampant conversion of natural resources into private properties in exchange of monetary and other favours.

First, they were the mobile telephone spectrums – a natural resource in the form of airwaves in the sky. Then it was followed by coal, which is found under the ground. Now even thorium is being illegally extracted from the sand off the coast of Kerala and Tamil Nadu. And finally, the airline sector. 

Indian Prime Minister Narendra Modi arrives in London on an Air India aircraft, 12 November 2015 | Foreign and Commonwealth Office, Wikimedia Commons

Here, the sky may be seen as a limited space for flying planes, which makes it another natural resource. Unsurprisingly, the government is handing it over to the private entities. 

India cannot meet the expense of the next twenty years in search of some Vinod Rai, who will come and audit the deal, when the damage is already done.

So, the country today demands a decisive course correction in policy if this kind of plunder is to be stopped. Almost every government-led sector is today plagued with the problems of corruption and the attendant impulse towards privatisation. Air India is only one glaring case on point.

Views expressed are the author’s own.


Vaidushya Parth is a Law Student at Narsee Monjee Institute of Management Studies (NMIMS) School of Law, Mumbai. He writes on Indian Constitutional Law and Economics.

Featured image: An Air India Boeing 747 touching down in Zagreb, Croatia | Wikimedia Commons