GoM puts off decisions, asks Air India to seek RBI approval

New Delhi: The group of ministers (GoM) tasked to look into struggling, state-owned carrier, Air India's, restructuring plans held its keenly awaited meeting yesterday without arriving at any conclusions. However, in a significant move, it asked the ministry for civil aviation to seek the Reserve Bank of India's approval for a plan to restructure Air India's debt.

The GoM is headed by finance minister, Pranab Mukherjee, and includes home minister P Chidambaram, petroleum minister, S Jaipal Reddy, Planning Commission, deputy chairman, Montek Singh Ahluwalia, aviation minister, Vayalar Ravi, and aviation secretary Nasim Zaidi.

At the meet yesterday, the members discussed a recommendation from a panel of secretaries to infuse Rs23,000 crore into the national carrier over the next ten years, out of which Rs6,600 crore could be invested in the current fiscal ending 31 March 2012.

"Though the meeting was inconclusive, we will go to RBI in a week to get their view on financial restructuring, after which there will be another GoM meet. Thereafter, the cabinet will decide the matter of equity infusion of Rs6,600 crore," civil aviation minister Vayalar Ravi said after the meeting.

This equity infusion will be inclusive of the Rs1,200 crore that the government has already provided this year. Over the last three fiscals, the government has injected Rs3,200 crore by way of equity into the airline.

Air India is in talks with lenders to convert a portion of short-term working capital into long-term loans as part of its financial restructuring plan. Long-term loans, which the airline had used to finance aircraft purchases, account for Rs20,000 crore of debt while short-term loans account for an additional Rs22,165 crore.