(Weekly Organ of the Communist Party of India (Marxist)
November 09, 2008
Is This The Government Of Aam Aadmi ?
DURING the last one month, UPA government has been doling out concession and relief at jet speed to the airlines – more precisely the two private airlines viz Jet Airways and Kingfisher Airlines, who now share 60 per cent of domestic aviation market. This is in total contrast to the government’s nonchalant apathy during the last two years to the relentless price rise and high inflation that had become unbearable for the common man specially for the poorest sections. During this period, the government, specially the Finance minister was harping on global inflation and instead of giving any relief, government in June 2008 imposed a bigger burden and higher inflation by increasing the price of petrol by Rs 5 per litre, the price of diesel by Rs 3 per litre and domestic gas cylinder by Rs 50. The plea was that global crude oil price was very high at 123 dollars per barrel in June 2008 which incidentally reached 147 dollar per barrel before it started coming down in August 2008. Today, the global crude price is hovering round 60 – 65 dollars per barrel. There has been persistent demand all through to reduce the enhanced price of diesel, petrol and LPG in order to bail out the common man from the inflationary trend caused by the rise in prise of transportation fuels.
The government vehemently has resisted the demand, arguing that public sector Oil Marketing Companies (OMCs) are incurring losses even with the reduced global crude price. Similarly, the Finance minister did not rationalise/reduce the taxes/duties on petrol and diesel despite repeated pressure from the Left parties to ease the burden on common man.
GOVT’S SHAMELESS VOLTEFACE
A government, which has been so passive to the demand of price reduction in petroleum products used by common man, became over-active when Jet-Kingfisher lobby started pressurising the government on reducing the price of Aviation Turbine Fuel (ATF), the petroleum product used in aircrafts. The cudgel for this lobby was taken up by none other the Civil Aviation minister himself who was instrumental in increasing the domestic market of these two private airlines to 60 per cent at the cost of the national airlines Indian Airlines and Air India. The national airlines have now a market of hardly 14 per cent as compared to 46 per cent in 2004. The hectic lobbying by the minister and a section of media on “crisis in aviation industry because of high fuel cost” resulted in the following relief/concession to these airlines by the government:
Reduction in the price of ATF in four phases during last three months i.e. from Rs 71,028/kilolitre in August 2008 to Rs 44,965/kilolitre as on day i.e. a reduction of Rs 26/litre roughly.
Exemption of ATF from import duty of 5 per cent.
The excise duty levied by government of India on ATF is Rs 1.80/litre where as the same on diesel is Rs 3.60/litre and on petrol is Rs 13.35/litre.
More than Rs 2000 crore payable to public sector OMCs (which are running on losses as per the government under cash crunch) by these airlines, have been deferred.
About Rs 1000 crore payable to Airports Authority of India (another PSU) by these airlines, have been similarly deferred.
Inspite of these reliefs, till now the airlines have not reduced the airfare. The above shows a naked bias of the government to bail out two private airline corporates at the cost of public sector companies as well as the common man. As a matter of fact, with above pricing and taxation structure actually the farmers using diesel, the transport carrier for essential commodities, bus and rail commuters, scooter/motor cycle users, etc., are virtually subsidising the airlines or air travel. And they call themselves government of Aam Admi?
BAIL OUT FOR WHAT?
The government along with a sector of corporate media is shouting from the roof top that the aviation sector is experiencing financial crisis and the reasons are being attributed to high fuel and operational cost. As per one such report, Jet Airways made a loss of Rs 806 crore in 2007 – 2008 and Kingfisher a loss of Rs 1000 crore. Following financial results of Jet Airways (on their website) says something else (Kingfisher’s results are not in public domain).
Jet Airways made a net profit (after tax) of Rs 27.94 crore for the year ending 31.03.2007. It incurred a loss of Rs 253.06 crore for the year ending 31.03.2008.
The fuel expenses were 34 per cent of the total expenditure in the profit making year of 2006 – 2007, which increased nominally to 35 per cent in the loss-making year of 2007 – 2008. So how does the question of high fuel expenditure arise?
The major components leading to the Rs 253.06 crore loss in 2007 – 2008, are the following:
Depreciation has gone up from Rs 414 crore in 2006 – 2007 to Rs 777 crore in 2007 – 2008 i.e. an increase of about Rs 300 crore.
Interest and finance charges has gone up during the same period from Rs 240 crore to Rs 492 crore i.e. an increase of about Rs 252 crore.
This increase in expenditure of Rs 552 crore on account of abnormally high depreciation and interest charges are obviously because of acquisition of new assets. Incidentally Jet Airways had acquired Sahara Airlines for Rs 1465 crore in April 2007. But the moot point is that the loss of Jet Airways for 2007 – 2008 was not because of high fuel and operational cost but because of unplanned acquisition of asset and expansion plans. Can the government subsidise this through public exchequer under the cover of “bail out”? M/s Manmohan Singh, Chidambaram and last not the least, Praful Patel owe a reply to the people as to how without a detailed investigation into the financial transactions of these companies – their acts of omission and commission - such huge relief and concessions were given to them only on the basis of crisis hyped by the two airlines with active guidance by the Civil Aviation minister. Is it not abetting an act of deceit and deception, if not fraud? Will the government reply? UPA government has no business to talk about “aam admi” who can not get a relief of Rs 5 per litre for petrol and Rs 3 per litre for diesel when Naresh Agarwal - Vijay Mallya combine gets a relief of Rs 26 per litre for ATF for their corporate interests.