October 11, 2021
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Maharaja in safe custody
To: either/view subscribers
Good morning. Clean environments are officially a human right! Despite the pushback from US, UK and other such big dogs, the UN Human Rights Council recognised that an individual’s access to a clean and healthy environment is a fundamental right. This “historic breakthrough” not only formally added weight to the fight against climate change, but also, with some major players backing out, reiterated the UN’s commitment to an even international playing field. What this means for the global climate, literally and politically, only time will tell.
📰 FEATURE STORY
Tata takes over Air India: A fresh start or a gift against national interests?
Sold! For ₹18,000 crores. Tata Sons, you’re now the proud owner of Air India. The airline is synonymous with Indian aviation and travel. You’ve probably taken at least one journey in an aircraft with the famous Maharaja in tow. Turbulent is probably an apt word to describe Air India’s journey over the past few years. Now, the troubled airline might see some clear skies ahead as Tata Sons won the bid to buy the government’s equity shareholdings in the company. Talace Private, a wholly-owned subsidiary of Tata Sons, will have its task cut out, given the problems it needs to solve.
It’s been more than six decades in the making and perhaps an emotional journey, given the history of Tata and Air India. Tata Group’s chairman emeritus, Ratan Tata, ended his open letter on the announcement with a simple “Welcome back, Air India.” Now, the hard work begins. Can the airline with many ailments take to the skies and regain its past glory, or is this task seemingly insurmountable? The impact of this privatisation decision by the government will be looked at closely from all corners.
Context
As stated above, Air India has had a tough go of it recently. Let’s trace the journey of this once majestic company. Founded in 1932 by Jehangir Ratanji Dadabhoy Tata, it was then called Tata Airlines. More than a decade later, in 1946, it was made a public company and renamed Air India Ltd.
Post World War II, Air India was widely recognised as one of the crown jewels of India. It had a majority of the domestic market share. So how and when did things start to go wrong? Let’s fast forward to 1994. It’s when the Indian aviation sector was opened up to private players. In came the likes of Jet Airways and Sahara Airlines with affordable rates for domestic flights.
Attempts to privatise the airline didn’t succeed. Despite this, it continued to operate as India’s largest airline. From 2003 onwards was when things started to go really awry. In the years that followed, if you were looking to book a domestic flight, the term low-cost carrier would’ve been front of mind. Kingfisher Airlines, SpiceJet, GoAir, Indigo, to name a few, took the sector by storm.
The new carriers had smaller, more fuel-efficient aircrafts that required less servicing after each flight. Air India continued to operate an aging fleet. The result – the new kids started to eat into Air India’s share of the pie. As debts mounted, it suffered financially, to the point where it struggled to pay employees. In 2011, the government pumped ₹30,000 crores of funding spread over a decade. That antidote wasn’t enough.
A chance to start anew with privatisation
From nationalising the company to now selling it to the best bidder, the Tatas, no less, it has been quite a journey. Not only for the company but also for the country. It’s a win-win all around that ended with a remarkable homecoming. For you as the taxpayer and for the government, the sale is good news. Why would you want to continue to foot the bill for a loss-making unit?
Clearly, Air India holds a special place in the Tata lexicon. It’s a reunion that couldn’t be scripted better, given everything the airline and the sector have been through. Now’s the chance for them to prove why Tata is the rightful home of Air India. You probably will have to put the business aspects of this deal aside to look at the sentiment and poetry of it all. Ratan Tata’s message with the image of JRD Tata captures it.
In Tata’s message, he thanked the government for opening up select industries to the private sector. It’s important to note this, given the role of the previous government in their control of the airline. For some, the government controlling the aviation sector is a big no-no. The hope is that this decision is seen as the road to easing off of private players, who saw the government playing favourites for Air India. At least now, commercial decisions might be the norm and not driven by bureaucrats and politicians.
Now, let’s look at the big picture. If you’re wondering whether this’ll spark a new era in Indian aviation, the answer might be yes, in due course. There will certainly be a paradigm shift at least. Take it from IndiGo CEO Ronojoy Dutta, who sees this as good news. The sector as a whole has been bruised and battered, and the pandemic hasn’t helped matters. Since Jet Airways and Kingfisher airlines crumbled, now it’s an opportunity for the new Air India to get new employees. From the employees’ point of view, they can now have a more trustworthy employer.
Uphill task and a gift to the Tatas
You can’t be faulted for thinking that privatisation in the aviation sector is worrisome. As mentioned earlier, Air India has an important history with the country, and the government selling it to a large conglomerate for the sum of ₹18,000 crores might seem to go against national interest. The government’s mantra has been to reduce its role in the economy.
So how do the finances stack up? The deal doesn’t do much in helping the government achieve its disinvestment targets. Air India has a debt of ₹61,562 crores. Of this, the Tatas will take care of ₹15,300 crores, and the remaining ₹2,700 crores will be paid to the government in cash. Of the remaining assets, they’ll generate ₹14,718 crores. That leaves the government with ₹28,844 crores to pay back.
If you think this is absurd and wrong, you’re not alone. The CPI(M)-backed Centre of Indian Trade Unions (CITU) have come out all guns blazing against the deal labelling it, “anti-national” and going against the public interest. Successive governments have indeed mismanaged Air India. Yet, the airline has continued to operate. It has a good workforce, of more than 12,000. What about their future? The deal only states their retention for a year. After that, they would be at the mercy of whatever Tata decides.
One main point of contention is the importance of having a national carrier. Also, the public sector is there to serve the people, even during calamities or disasters. Selling such important public assets for a small sum like this, is being blind to the concerns of the workers and not caring for national interests. The Tatas aren’t exactly the go-to example for operating an airline efficiently. Their two airlines, AirAsia India, and Vistara haven’t made money. Combined, they’ve lost $845 million till March 2020.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
Mr PM, a critic speaks
For the Left:
Anti-BJPism didn’t work for Muslims. Now it’s making the Opposition lazy
🏴 STATE OF THE STATES
Not Enough Snow (Himachal Pradesh) – The gradually decreasing snow in the hill state has alarmed environmentalists as the seasonal snow cover plays an important role in the area’s ecology. According to a joint study by the State Centre on Climate Change and Space Applications Centre (ISRO), major river basins like that of the Satluj, Ravi, Chenab and Beas, have all had an “overall decrease of 18.5% in area under snow” in the 2020-21 winters. This trend, precipitated by climate change, is rather unnerving when the snow covers’ role in “controlling the hydrology of the river basins” are considered. We like change, just not this kind of change.
Tensions Over Punjabi Lane (Meghalaya) – The Harijan Panchayat Committee (HPC) have said that they will “fight tooth and nail” to counter the relocation of the Dalit Sikh community of Shillong. Earlier this week, the state cabinet approved a proposal to relocate the “illegal settlers” from the Them lew Mawlong area, popularly known as Punjabi Lane. The HPC secretary Gurjit Singh says that the land was given to the community by the chief of Hima Mylliem, a chiefdom of the Khasi Hills, and thus, “no one else has right to this land.” Given that the laws in Meghalaya don’t allow non-tribals to own scheduled land, this move by the cabinet is considered to be an unlawful affront to the Sikhs of Shillong.
Sisters Get Heritage Plaques (West Bengal) – Toru Dutt, considered to be India’s Keats, and her sister, Aru Dutt will be getting a stone plaque at Maniktala Christian Cemetery in Kolkata to honour their memory. Widely considered as India’s first poetess to write in both English and French, Toru Dutt died tragically young, at 21, back in 1877. The Bengali translator pioneered the English novel in India and was one of the founders of Indo-Anglian literature. Toru and Aru Dutt’s graves were also recently restored by Kolkata’s heritage panel as there were “signs of vandalism” due to their lack of maintenance but with the plaque, the city promises to right its wrongs when it comes to these formidable women.
Cows In A Ditch (Madhya Pradesh) – The administration in the Rewa district has been at it since October 1 – the operation to rescue 140 cows from some villagers who were trying to protect their crops. As it turns out, a couple of residents of Lalgaon and Sarai Rachoi village resorted to pushing the cows into Rewah Ghati, a local ditch, to keep them from munching on their standing crops. While some cows were simply injured, others have barely made it. Some died from the impact. The MP police have filed a case under the Prevention of Cruelty to Animals Act for pushing the animals that were past their milking period, into the ditch.
The New Vermin (Kerala) – Rats, mice, fruit bats and crows are all considered vermin in the eyes of the state’s forest department, and why wouldn’t they? They destroy crops and the farmers are over it! Now, farmers are trying to add the Grey-headed Swamphen or Neela Kozhi in the list of vermin they are allowed to take action against. As of now, the species is protected under the Wildlife Protection Act and its status can only be changed by the Forest Department of Kerala. Pokkali cultivators have even moved the Kerala High Court to get them to declare the bird as vermin. It’s nature versus nurture for this one.
🔢 KEY NUMBER
15% – That’s the minimum tax rate big companies will have to pay because of a global deal agreed to by 136 countries. According to the Organisation for Economic Cooperation and Development (OECD), only four countries – Kenya, Nigeria, Pakistan and Sri Lanka – have not joined the accord yet but over 90% of the global economy backs the deal that makes it harder for companies to avoid taxation.