Jet Airways: Why is Modi govt giving a bailout package from public money, asks Congress

The Congress on Wednesday said the government intended to bring a bailout package for the cash-strapped Jet Airways - partly owned by foreign investors - using Indian tax payers' money.

Congress spokesperson Randeep Surjewala told the media that the Modi government had asked public sector banks - State Bank of India (SBI) and Punjab National Bank (PNB) - to waive the debt on the airliner totalling ₹8,500 crore by taking an equity of ₹1.

On successive complaints made to PMO since 2016,  PMO directed the investigation  on 27.08.2018. A Forensic Audit Investigation by SBI was ordered on 7.12.2018 through Ernst & Young.

"Naresh Goyal, who is a London-based NRI, owns 51% stakes while Etihad Airways has 24% stake. It means the 75% ownership is with an NRI and a foreign company," said Surjewala.

"Why is the Modi government giving a 'bailout package' to a bankrupt corporate entity like Jet Airways owned by foreign investors, out of public money, but not to India's debt-ridden farmers?"

"The PMO (Prime Minister's office) has issued two orders. It has asked the SBI and other PSU banks to waive the loan by converting it into equity of ₹1. Also, it is going to pay ₹150 for every share to Etihad.

"Will the Modi government now save every defaulting crony capitalist out of public funds?"

3. Reports in public domain now reflect that PM Modi wants to give a ‘bailout package’ to Jet Airways:-

(i) By directing the SBI and other PSU Banks to convert ₹8,500 Cr debt for equity shares of Jet Airways valued at Re 1, SBI and other banks will thus become owner of 50% of a bankrupt private airline.

(ii) By directing the National Infrastructure Investment Fund (NIIF) to buy foreign companies’ Etihad Airways 24% stake at a value of Re150/share.

This is being done without any independent financial valuation of Jet Airways or any due diligence. Modi Govt is in such a hurry that they are not even willing to await the result of their own investigations.

IMPACT:

(i) SBI and other banks will now be running a private bankrupt airline as its 51% owner.

(ii) Jet Airways debt of ₹8,500 Cr will be wiped out by taking equity of a private bankrupt airline by Public Sector Banks.

(iii) A foreign company i.e. Etihad Airways will be given a ‘Bail Out Package’ by offloading of its 24% shareholding to National Infrastructure Investment Fund (NEEF) for ₹150/share without any valuation or due diligence.

(iv) Private players will walk away happily, while Govt of India and PSU Banks will be now running a bankrupt private airline. On one hand, Modi Govt is seeking to privatize Air India and on the other hand they are buying a bankrupt private airline with public money.

With inputs from IANS