People's Democracy

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


No. 11

March 16, 2008



Will The Prime Minister Reply, Please!

By Special


THE government’s decision to close existing airports of Bangalore and Hyderabad as a part of concession to operationalise two new greenfield airports raises more queries than answers from proponents of free market economy like Dr Manmohan Singh, Montek Singh Aluwalia, Chidambaram and others.

  1. If the free market economy means competition on a level playing field, as professed by the reform lobby, where is the competition and level playing field when the revenue earning airports are being closed down to ensure a monopoly market for the private airport operators at Hyderabad and Bangalore?

  2. The government is not prepared to review the decision to close two existing airports inspite of the recommendations of Parliamentary Standing Committee on Transport, Tourism and Culture, on the plea that any review of the concession agreement for Bangalore and Hyderabad greenfield airports would give a wrong signal to the future investors. Is the prime minister aware of exact quantum of investment made by these investors in case of Bangalore and Hyderabad? Is he aware of the following funding pattern for these two airports as given in the accompanying tables.

Greenfield airport at Shamshabad, Hyderabad:

Name of the investors

GMR Infrastructure Limited with Malaysian Airport Holding Berhard (MAHB)

Total Project Cost

Rs. 1400 crore (estimated cost in 2005)

State support by Government of Andhra Pradesh

Rs. 422 crore ( Rs. 107 crore grant and 315 crore interest free loan)


Rs. 400 crore


5000 acres (free of cost)

Greenfield airport at  Devanahalli, Bangalore:

Name of the investors

Seamens, Germany with Unique Jurich, Switzerland and Larsen & Turbo

Total Project Cost

Rs. 1411 crore (estimated cost in 2005)

State support by Government of Karnataka

Rs. 350 crore


Rs. 735 crore from lenders


4300 acres (free of cost)

In view of the above will the government clarify how much was the real investment in terms of equity by the investors. Is it not a fact that the investment would not be more than Rs 700 to 800 crore for two airports together? Does it not mean that with free land of 8000 acres backed by state government and AAI aid of more than Rs 800 crore, the State equity should be more than 50 per cent? Who is then the real investor? Is such investment more attractive than Airports Authority of India, which is likely to earn a profit of Rs 1200 crore in 2007-08 with reserves of more than Rs 4000 crore.

  1. Is the prime minister aware of the investment potential of the Central Public Sector Enterprises as a whole as revealed in the latest Public Enterprise Survey placed in parliament on February 28, 2008 as per which these PSEs including AAI has a reserve and surplus of Rs 4,15,000 crore as on 31.03.2007 and with a net profit of more than Rs 80,000 crore during the year 2006-07. What signal is being given to this biggest investor in the country if two of its revenue earning profit centres in civil aviation sector are closed for giving concession to the paltry investor of Rs 700 crore and odd?

  2. And lastly when the prime minister is so much worried about the wrong signal to the investors, is he not equally worried about the signal being given to the parliamentary system when an unanimous recommendations of a Parliamentary Standing Committee placed on March 5, 2008 are set aside like a waste paper and the government goes ahead with closing of these airports inspite of the recommendations to keep these airports running? Is it not an unhealthiest signal to the arliament and the people of the country?