CAG slams Air India for lack of due diligence in contracts
06 Aug 2011
New Delhi: The Comptroller and Auditor General of India (CAG) has slammed Air India's management saying its lack of foresight in the purchase of new aircraft resulted in a loss of Rs200 crore as the carrier's expansion plans were not based on due diligence. It said the new aircraft should have been bought in two phases.
The CAG report has summarised the period 2005-2010, when Praful Patel of the Nationalist Congress Party (NCP) was the civil aviation minister. However, his name does not find mention in the report.
At its end Air India has rejected CAG's contention that 'defective contracts' led to losses, saying the new aircraft were intended to meet increased demand.
The government also says all decisions to buy aircraft were cleared by an empowered group of ministers (EGOM).
The government has also defended its decision to buy 50 aircraft for Air India saying this led to huge bulk discounts. It ordered another 18 for its low cost operation, Air India Express.
The CAG, in its report, had observed that in this case 35 aircraft would have sufficed.
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