CAG blames aviation ministry for Air India mess

A report on the functioning of Air India by the Comptroller and Auditor General (CAG), tabled in Parliament today, squarely blames the civil aviation ministry for the financial quagmire in which the national carrier finds itself.

One of the basic reasons found by CAG for the mess is that crores of rupees were wasted in the ''risky'' purchase and leasing of aircraft. It adds that one 'defective' contract with Airbus led to a loss of Rs200 crore.

The report also calls the merger of Air India with its counterpart Indian Airlines, which ran services within the country, as "ill-timed".

Alleging lack of due diligence, it says that no benchmark assessment of the cost of the aircraft was carried out before negotiations for buying them, and the acquisitions seemed to be merely supply driven.

The report points out that Air India was carrying a debt of Rs38,234 crore as of March 2011. It added that Air India hastily reworked its earlier acquisition plan.

The acquisition of aircraft was to be funded through debt, which was a disastrous move and should have rung alarm bells in the aviation ministry and the Planning Commission.