The Finance Ministry today sent back the draft cabinet note on the Ministry of Civil Aviation’s proposal to buy 43 Airbus aircraft for Indian Airlines, a deal that has been in the works for over five years. The $ 1.9-billion (Rs 10,000 crore) proposal which has been through several levels of decision-making — including pre-PIB (Public Investment Board), PIB as well as an overseeing committee headed by former Chief Vigilance Commissioner and Comptroller and Auditor General of India C G Somaiya — has been returned by North Block for the second time in the past few weeks. The proposal is being circulated among various ministries before it is sent to the Cabinet for final clearance. With the Finance Ministry raising objections for a second time, there is a big question mark over the proposal. The reason the Finance Ministry has turned down the proposal this time is the Ministry of Civil Aviation’s inability to prove that the price was the lowest quoted by Airbus Industrie anywhere in the world. It was on this issue that it had raised objection last time, a month ago. The ministry asked the Indian Airlines to get a confirmation from Airbus Industrie that this was the ‘‘best price’’. Airbus confirmed this without disclosing the prices at which it had sold the aircraft to other global airline companies. It argued that this could not be disclosed as it was part of commercial negotiations with other customers. The Finance Ministry sought the information soon after a group of MPs questioned the Airbus deal in the light of the prices offered to Air Asia, a low-cost South East Asian carrier. The Ministry of Civil Aviation is surprised that the question is being raised now when the Finance Ministry’s representatives were present at every level of clearance. In fact, officials from the Planning Commission and Finance Ministry were present at both the pre-PIB and PIB levels in 2004. In fact, the former Expenditure Secretary was also present. The Indian Airlines Airbus deal included the purchase of 19 A-319, four A-320 and 20 A-321 aircraft. The proposal was first mooted by the airline in 2001 at a time when the airlines industry was going through its worst phase post-9 Subsequent negotiations went on through a Price Negotiating Committee within the airline as well as an overseeing committee headed by Somaiya which also had on board officials from the Finance Ministry.
