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The Air India ramp at Mumbai CSMI Airport. Photo by and copyright Devesh Agarwal.
The Air India ramp at Mumbai CSMI Airport. Photo by and copyright Devesh Agarwal.

Should India feed its citizens or prop up Air India?

India leads the world in hungry people.

In the recently released Global Hunger Index, India dropped to rank 102 out of 117 countries, placing it below its impoverished neighbours Nepal, Bangladesh, and Pakistan.

About 15% of India’s population is either malnourished or undernourished. About 194 million Indians go hungry each day, and regretably a large percentage are children. The government of Karnataka spends Rs 5.87 per hot meal provided to children under the mid-day meal scheme. To provide just one meal each day for its 19.44 crore (194.4 million) hungry, India will need to spend Rs 114 crore per day or Rs 41,610 crore per year.

Compare this to the investment the government has made in Air India till date: Rs 80,000 crores.

Shutting down Air India can help eliminate ALL of India’s hunger.

Evidence of misplaced priorities

Justfying the investment as critical to the turn-around of Air India, the government pumped in over Rs 24,000 crore of tax-payer money into the airline.

The result. Air India lost about Rs 20 crore a day in the most recent financial year. The official debt load at the end of last available fiscal is Rs 58,351 crore. The current estimate is closer to Rs 70,000 crores.

The government is continuing its misplaced largesse by further moving another Rs 29,400 crores of the airline’s debt in to a special purpose vehicle. The government is treating this move as a contingent liability, i.e. an “off the books” transaction, which will be eventually be funded by taxpayers. Let us keep in mind, this is the same government that is criticising the corporate and financial sector for “off-the-books” transactions.

Rs 94,000 crore and climbing

Adding the Rs. 24,000 crore cash bail-out, and debt of Rs. 70,000 crore, puts the total in excess of Rs 94,000 crore, and this is just to enable the airline to continue. There is absolutely no evidence of success on the horizon, if anything, with the launch of some new routes, many industry observers the losses will increase.

Put the Rs 94,000 crore against the Rs 41,610 crore for feeding its hungry citizens. Do we need really an “national airline”?

Each Air India employee worth 2,520 meals

Air India’s employee count is estimated between 16,000 and 21,000. The accumulated bailouts and losses equates to about rupees five crore per employee. If the airline was to be shut, any employee valued at this level will have no challenge finding jobs elsewhere.

Just last fiscal year’s losses of Rs. 8,640 crores equates to Rs 54 lakhs (0.54 million) spent per Air India employee or Rs 14,794 per day. In effect the government is spending the equal to feeding 2,520 meals on each Air India employee.

Feed the hungry or prop up Air India

Do you feel the government should feed the hungry or prop up Air India?

Share your thoughts via a comment or on Facebook or Twitter.

I would also like to clarify, being an aviation site we have focussed on Air India, the same logic and metrics can be applied to the now denied bail-out of BSNL, or any other government owned company.

The views expressed are personal and do not neccessarily reflect those of this site or any other body or organisation.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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