MUMBAI -- The Indian government has drawn up a list of 23 state-owned companies it wishes to sell off to the private sector by next March as part of an ambitious plan to balance the budget and revitalize industry.
The initiative stands to generate as much as 1.05 trillion rupees ($14.7 billion) in proceeds, the biggest sum in a single year under Prime Minister Narendra Modi. But the roster includes seven money-losing operations such as Air India, the flag carrier that no one seems to want.
"Our plan is to revive Air India, make it more operationally viable and then to disinvest it," Civil Aviation Minister Hardeep Singh Puri said during a legislative hearing in July. "So far as Air India is concerned, the government is committed to the privatization of Air India."
The government plans to take bids on the heavily indebted airline as early as October. The carrier has generated net losses of at least tens of billions of rupees in each of the seven years through March 2019. During that span, the government coughed up between 18 billion rupees and 57.8 billion rupees annually just to keep the business afloat.
When the government unveiled a previous plan last year to sell Air India, the airline received no interested buyers, and bidding was ultimately shelved. The concern is that the same scenario will play out this time, especially now that India's economic growth has slowed.
Domestic air passenger traffic jumped 19% in India last year to a record 139 million passengers, double the volume in 2014. The International Air Transport Association estimates that India's domestic passenger numbers will become the third largest in the world behind the U.S. and China.
But the market is teeming with private competitors, undermining the logic of a state-owned airline. India said in July that it will ease restrictions on foreign ownership in the airline sector. The current equity cap of 49% will likely be lifted, indicating that the government will court bids from overseas investors.
The Indian government owned at least 51% of roughly 260 companies at the end of March 2018. But New Delhi also projects a budget deficit of 7 trillion rupees for the current fiscal year. The shortfall will persist if state-owned enterprises are not offloaded.
Other public-sector businesses on the auction block include Cement Corp. of India, Scooters India, Pawan Hans Helicopters and solar cell maker Central Electronics. Each of these companies operates in relatively mature markets and faces many private-sector rivals.