Cash push

New Delhi, Dec. 8: An equity infusion of Rs 800 crore into Air India figures in the government’s additional expenditure plans of Rs 25,725 crore in this fiscal. Permission was sought from the Lok Sabha today for this sum.

The equity prop follows promises by the ailing airline to generate another Rs 2,000 crore through savings and revenue generation.

Officials said this was the first tranche of equity infusion, which could be between Rs 1,500-2,000 crore. A request for a soft loan of up to Rs 3,000 crore has been rejected.

The ailing carrier had last month put some 10 aircraft up for lease. Other measures include the renegotiation of payouts, route restructuring and fleet optimisation.

Air India suffered a net loss of Rs 5,548.26 crore in 2008-09, while its revenues declined from Rs 15,252 crore in 2007-08 to Rs 13,479 crore in 2008-09.

The airline attributed the poor performance to global recession and a fall in load factor, which is the ratio of the number of passengers in a flight to the total seats.

Air India which has accumulated losses of Rs 7,200 crore, is also seeking a government guarantee to retire high-cost debts, which make up some Rs 11,000 crore of its Rs 16,000-crore debt portfolio. Officials said the government was likely to give permission.

Finance ministry officials said the nearly Rs 26,000 crore of fresh expenditure wouldn’t add to the government’s fiscal deficit, estimated at 6.8 per cent of the gross domestic product, or over Rs 4 lakh crore.

Total tax receipts will be on target this fiscal and there will be savings on several heads that “would more or less balance the budget despite the supplementary demands, which anyway are normal”.

Besides providing funds to Air India, the government has earmarked additional money for the Commonwealth Games, the National Calamity Contingency Fund, metro projects and food and fertiliser subsidies.

Although the government is seeking Parliament’s nod to raise expenditure by Rs 30,943 crore during 2009-10, the net impact will be Rs 25,725 crore as Rs 5,217 crore will be met through savings.

The government comes out with several batches of supplementary demands for grants during the course of the financial year to modify the expenditure proposals made in the budget. It also seeks Parliament's nod for additional expenses not envisaged during the budget.

For the current fiscal, the budget had fixed an expenditure of Rs 10.20 lakh crore, which will now go up by Rs 25,725 crore.

For the Commonwealth Games next year, the government proposes to provide Rs 350 crore as loans and advances to the organising committee. The other proposals for additional expenditure include Rs 1,080 crore towards the Integrated Child Development Scheme, Rs 254 crore equity investment in Bharatiya Nabhikiya Vidyut Nigam Limited and Rs 3,000 crore towards fertiliser subsidy.