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Journalism of Courage
Union Cabinet is likely to clear the proposal of the civil aviation ministry to partly compensate the Indian Airlines for losses incurred by incorporating assets and liabilities of Vayudoot about a decade ago.
Finance ministry has already given its go ahead to writing off of loans amounting to Rs 179 crore and the proposal will be considered by the Cabinet on Thursday.
Finance ministry, it may be mentioned, did not accept the compensation formula proposed by the civil aviation ministry and was of the view that the dues amounting to Rs 179 crore relating to ministry and public sector undertakings be written off. This excludes about Rs 7 crore due to banks and other entities.
The civil aviation ministry’s formula included writing off dues worth Rs 109 crore owed to governemnt entities; one time non-plan budgetary support of Rs 100 crore to IA; and permission to civil aviation ministry to negotiate with the creditors.
The liabilities of Vayudoot on the date of merger in 1993 was Rs 186 crore. The book value of assets of the company was less than Rs 15 crore. In addition to this, the unaccepted disputed dues of Vayudoot amounted to Rs 255 crore.
The Cabinet, while approving the merger of Vayadoot with IA in 1993, had stipulated that there would be a moratorium for five years on repayment of dues owed by Vayudoot to creditors which included public sector banks and central government.
It was further stipulated that after the period of moratorium, liabilities will be discharged by the Indian Airlines in 10 annual installments. Also, in case of a delay in payment of any installment, interest at the bank rate would be payable on the defaulted amount.
As per the Cabinet decision, the IA was expected to begin repayment of loans in 10 annual installments beginning May 1998. However, the IA failed to do so as it was in a financial mess. The Cabinet, once again in 1999, considered the issue and extended the period of moratorium by two years. The period also got over with IA showing no signs of improvement.
Meanwhile, Bank of India, one of the creditors, moved the Delhi HC for recovery of dues. The issue concerning the problems being faced by IA on account of merger with the Vayudoot will again come up for consideration by Cabinet on Thursday. The likely decision of the Cabinet to write off loans amounting to Rs 179 crore will give some financial respite to IA which is hardpressed to clear the dues.
