The Telegraph
Since 1st March, 1999
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Take-off meet on airport selloff

New Delhi, July 3: Worried about a backlash on airport privatisation stalling other plans for public-private partnership to be unveiled in the coming budget, Prime Minister Manmohan Singh is likely to meet leaders of the four Left parties over the weekend.

Senior government sources said Singh is likely to meet leaders from the Left parties agitating to stall the sale, to try and work out a solution to the vexed problem. Till the airport issue is resolved, several other privatisation initiatives in the works cannot go through.

These include controversial plans to sell off a remainder 49 per cent stake in Balco to Sterlite and the possibility of an aircraft maintenance and overhaul joint venture with Singapore Airlines by hiving off Indian Airlines’ engineering wing, besides sale of Calcutta-based Hooghly Printing Works and closure of sick PSUs.

The Balco sale is likely to be debated at a core group of secretaries (CGS) meeting to be held soon and a Cabinet Committee on Economic Affairs (CCEA) note is supposed to be prepared after the CGS clears it.

Although the government is unlikely to keep any divestment target in this year’s budget and these sales do not make any differences to budget figures, it does plan to push through a divestment proceeds fund in the budget promising to spend money out of it on social infrastructure and revival of PSUs and the entire process may be jeopardised unless the Gordian knot on airport privatisation is cut.

It is expected the Left will ask Singh at the weekend meeting to study the issue of airport privatisation again and check out the possibility of developing the two airports through Airports Authority of India at a cost of Rs 4,000 crore. If Singh balks at this, the Left is likely to try and wrest some other concessions before allowing the privatisation plan to proceed.

There is cool calculation behind the parleys that both sides are anxious to undertake. Both know that the airport privatisation issue has turned into a test case for the Congress-led coalition government. If it sails through smoothly, future private-public partnership, especially in the sphere of disinvestment will go through easily.

However, if stalled, disinvestment will take a long time to pick up again while the much-touted public-private partnership in areas such as infrastructure development, social sector etc may be hit far more.

If the privatisation bid takes off but after being laden with concessions to the Left, the Congress government will have to test each and every selloff before letting it happen.

The group of ministers on airports had decided to allow privatisation of the country's two gateway airports — Delhi and Mumbai — with 74 per cent equity being sold to private entrepreneurs, including up to 10 per cent to airlines and 49 per cent to foreign stake holders.

Many have taken this permission to mean that the government is not unwilling to let its two gateway airports be controlled by foreign players, despite the fact that most of the leading European nations do not allow more than 24 per cent foreign investment in gateway airports.

The 10 per cent stake being allowed to domestic airlines in these two airports is also being seen as a conflict of interest as only the two private airlines are likely to try buy this stake and not the two larger state run airlines. In most airports abroad, the national airline is allowed a stake and not smaller ones.

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