People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 18

April 30, 2006



Is Privatisation Synonymous With Modernisation?


Dipankar Mukherjee


HAD it been so companies like IISCO, Braithwaite, Burn Standard, Richardson Crudus, NTC, NJMC etc. could have been modernised by private owners only.  It did not happen and today the government has to take up the job of upgradation/modernisation of some of these industries. Along with 100 and odd PSUs, more than 4000 sick medium/large-scale industries in private sector stand referred to BIFR because of lack of modernisation.  Private or public ownership has nothing to do with modernisation.




Airports Authority of India Act was passed in parliament in 1994-95 to bring the four metro airports viz Delhi, Mumbai, Kolkata and Chennai belonging to International Airports Authority of India and other airports belonging to National Airports Authority under one umbrella viz. Airports Authority of India with the declared object, which read as follows:


“International airports are put to more intensive use and generate substantial revenues which accrue to International Airports Authority of India.  Revenues of National Airports Authority of India are much less buoyant because a number of airports do not have the commercial air services whatsoever, while many others have only infrequent operations.  The National Airports Authority has therefore, not been able to generate adequate resources to meet the requirements of development and modernisation. To overcome this handicap and provide for closer integration in the management of airports and air traffic control, it has been found necessary to merge the International Airports Authority of India with the National Airports Authority of India.”


Accordingly the merger processes were completed in 1998. But in the same year i.e. in 1998 when the NDA government came to power, it was decided to demerge Delhi, Mumbai airports for the purpose of privatisation on the plea of modernisation. Though the said decision was taken by the NDA government, the same is  being given effect to by the UPA government led by Congress party which had decided earlier for merger. Mohamed Bin Tughlaq decided to shift the capital from Delhi to Daulatabad in 1326 AD and  reversed the decision within a year.  History still ridicules him. How would the earlier and present government explain the merging and demerging decision of AAI within a year? The present government led by Congress owes a reply to the people of this country.




At the time of formation of International Airports Authority of India as per the Act passed in parliament in 1972, the mission of the Authority was to design, construct and manage international airports for  providing service and facilities comparable to the highest international standards thereby ensuring maximum satisfaction to various users in a cost-effective manner.” The annual report of Airports Authority of India (AAI), which are placed before parliament, declares its mission for  “progress to excellence and customer satisfaction with world class airports”. 


From 1972 onwards the nation was being assured through parliament its capability of making world class airports. Then all of a sudden who has decided in 1998 that this is not possible? If the government reached the conclusion regarding  the incapability of Airports Authority of India in setting up and running of the airports of international standards, it is obliged to amend the declared mission of the Airports Authority of India and to apprise the parliament to this effect. Also the government is responsible to explain to the entire nation the parameters to determine the efficiency in providing the services to qualify as world class and how and why Airports Authority of India fails to approach that benchmark.




The need for modernisation of the airports not only in Delhi and Mumbai but also in other metro airports as well as the non-metro airports was felt long back. In  1996, AAI sent a proposal for modernisation of Mumbai and Delhi airports.  The proposals were processed and then stalled in 1998 by the NDA government without placing the same before the Public Investment Board (PIB).  In June 2003, the AAI Board approved a modernisation proposal costing approximately Rs 3000 crore for Delhi and Mumbai airports. The NDA government did not pursue the same on the logic of “no modernisation before privatisation’.


Not only that from 2001 onwards, all ongoing capital works for Delhi and Mumbai airports by AAI were stopped through written directives from the civil aviation ministry. Since 1998 numerous requests urging for capital works and proposals of projects for Delhi and Mumbai airports have been turned down arguing that the leasing privatisation process was to start.  From 1998 till date the Airports Authority of India was not allowed to undertake any major modernisation job.  Now the government, backed by corporate media, is maligning the AAI and its employees. The government’s callous approach is clear from the fact that during the last decade there were prolonged periods when the AAI was headless without a full time chairman. There was a sinister design in not allowing the Airports Authority of India to modernise the Delhi and Mumbai and other metro airports until they are handed over to the private players. In this mission of modern-isation via privatisation , the UPA government has shown over-enthusiasm to fulfill the task set by the earlier NDA government.




The Airports Authority of India, based on the Joint Employees’ Forum’s proposal for modernisation of both Delhi and Mumbai airports, had submitted its alternate plan. The plan prepared by seven senior executives of AAI and forwarded by the chairman, AAI to the civil aviation ministry had categorically  reaffirmed AAI’s technical and financial capacity to modernise Delhi, Mumbai and 35 non-metro airports. But this was turned down by the government without showing any reason. The AAI having a reserve of Rs 3000 crore and annual profit of Rs 400 crore can easily  borrow Rs 9500 crore from the market for modernisation of not only Delhi and Mumbai airports but also for non-metro airports. The organisation that has a strong asset base can mobilise the required funds from the financial institutions and banks and even could go for the 70:30 debt-equity mix where the 70 per cent will be debt fund and remaining 30 per cent will be equity. Instead, the government has selected a party having much lesser financial base to share the profits of the Delhi and Mumbai airports. And the modernisation projects of this party will be in reality funded by the government’s debt as well from banks like SBI, ICICI and many others. It is a clear case of privatising the profits at the cost of the public exchequer.




The facts reveal that the much-publicised concept of world-class airports has nothing to do with the aeronautical services, but is centered on what is being eyed as  non-aeronautical business indeed. It is the 2500 acres of land - 500 acres in Delhi and 2000 acres in Mumbai, which will be the major sources of earning revenue.  The AAI has so far been barred from utilising this prime land for commercial purposes.  Now some one is taking over the airports with a meager Rs 500 crore to mint money from real estate business. Airport modernisation is only a cover for allowing builder and land mafia to have a go at the land assets of the AAI.




In the overall interest of the AAI as well as the country, the employees of AAI, under Joint Employees Forum, have been fighting a bitter struggle against  this privatisation. Because of their struggle which led to an  unprecedented agitation in all the airports throughout the country in the first week of February 2006, the prime minister had to intervene and the civil aviation minister through his letter dated February 4, 2006 had to agree to form a Tripartite Committee comprising representatives of the government, the AAI management and the Joint Employees Forum to discuss the restructuring proposals of airports by the AAI and other employee related issues. The committee was formed on February 22, 2006 and was asked to give its report within three months i.e. by May 22, 2006. Even before the committee had an occasion to discuss the substantive issue of restructuring of Mumbai and Delhi airports, the government forced the AAI management to sign the shareholders agreement with two private parties viz M/s GMR & GVK on April 4, 2006 in the evening hours in a hotel in Delhi.  This conspiratorial action behind the back of the employees, exposes not only the breach of trust by the government but also its total lack of public accountability in handing over profitable pubic assets to a chosen few. “Breach of trust” is no matter for such public asset-dealers. This is no longer an issue for airport employees alone as this route of privatising profit-making PSUs would be followed by pro-privatisation regimes if not resisted at this stage.


This has to be resisted by the working class so that the government is forced to retrace its steps.  The fight against privatisation is a continuous process till the policy is buried and the valiant struggle of the airport employees would definitely be encouraging the future anti-privatisation struggles and further strengthen the fight against the blind followers of neo-liberal policy of “privatization at any cost”.