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Thursday, 28 November, 2019, 15 : 00 PM [IST]

Govt may exclude bulk of Air India debt to woo buyers

According to a report by Bloomberg, India is considering a plan to exclude more than half of Air India’s $11 billion of debt in the government’s latest attempt to woo investors to the struggling carrier, people with knowledge of the matter said.

Prime Minister Narendra Modi’s administration plans to ask proposed investors to take over INR 30,000 crore of the airline’s debt, which are backed by the carrier’s aircraft, the people said, asking not to be identified, citing private information. The government may call for the so-called expression of interest as early as December 15, the people said.

Modi’s administration, which failed to attract any bidder for the carrier last year, is keen to sell the company to help bridge a widening fiscal deficit following dismal tax collections and cuts to corporate tax rates worth $20 billion. .

Unprofitable for a decade with taxpayers bailing it out repeatedly, Air India’s appeal to any investor is contingent on the government’s ability to write off the debt not backed by assets. The government has pumped in INR 56,000 crore in the past decade in a bid to keep the carrier afloat, the people said.

The government will absorb INR 50,000 crore worth of obligations, the people said.
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