Air India: Inoperable & Unsaleable

Editorial INDIA TODAY dt June 19, 2017

• Air India, flagship national carrier, is to day inoperable and unsaleable.
• Air India has been piling up losses ever since the two erstwhile airlines – Air India and Indian Airlines – were merged in 2007 to form the present entity.
• Accumulated debt of Rs.52,000 crores & annual interest payout of Rs.5,000 crores is unserviceable. The airline has to repay Rs 19,000 crore by 2020-21.
• Air India’s combined OTP (on-time performance) at four metro airports is worst at 67.7% which means every third flight was delayed.
• Air India’s load factor was the lowest again among all national airlines at 81.4%.
• Air India’s share of the domestic market fell from 16% in Jan 2016 to 12.9% in Nov 2016. In January 2017, it improved market share to 14.1%.
• The airline is being kept alive by taxpayers’ money since the government is committed to pumping in about Rs 30,000 crore over a decade to prop up the airline’s equity. About 80 percent of this money has already been poured into the airline. The turnaround plan under Air India has been given such a massive equity support projects an operating profit of Rs 1,086 crore in 2016-17 on revenue of Rs 22,206 crore and a net loss of Rs 1,989 crore.
• Lenders mostly PSU banks & FI's are unwilling to take a 'haircut'. They are unwilling to convert debt into equity as well.
• Annual losses of Rs.3,000 unbearable.
• Govt of India is clueless how to handle this 'white elephant'.
• Air India management have no clue how to go about resurrecting it.
• Most undisciplined organisation today.
• According to public enterprises survey of 2014-15, just three PSUs accounted for over two-thirds (~62.9%) of the total losses incurred by the CPSE's in that year. They are BSNL, Air India and MTNL. 

My View:

Since divestment or privatization is out of question (no sane fellow will invest or buy Air India), Govt has only option i.e. shut down, dismantle, auction all its assets and repay all debtors from its coffers. That is the price Central Government has to pay for  signing as guarantor for Air India's debt. That would be the cheapest proposition. Govt has pumped in over Rs.24,000 crores during past decade as equity and it simply vanished. Any other option would cost nation, much more. Government should strictly implement BIFR norms of rehabilitating public sector units as soon as equity erosion exceeds 50%. Otherwise many more Air India's will surface year after year and costs nation dearly. Simultaneously, Govt should stop poking its nose into PSU's day-to-day management including Banks. Since PSU's are sinking one after other Govt should come out with a policy frame work to divest or sell all PSU's one after the other, ahead of their collapsing and confine itself to governance. BSNL Mobile was ready for launching in 2001 and the then Telecom Minister Pramod Mahajan intentionally delayed by over an year to favor Reliance Infocomm's launch in 2002, for which he was ousted by PM Vajapayee. BSNL has been reeling under six consecutive years of losses of over Rs.40,100 crore of accumulated losses. It has been crushed by private sector telecom rivals. The future is, there seemed no future. Unless PSUs are operated professionally free from political interference each one will find its way like Air India and BSNL.

Aadhaar issues

• The Unique Identification project was initially conceived to provide a unique identity number for each resident across the country and would be used primarily as the basis for efficient delivery of welfare services. 
• It would also act as a tool for monitoring of various programs and schemes of the Government.
• The objective was to eliminate pilferage and corruption in public distribution system and distribution of subsidies.
• The first UID number was issued on Sep 29, 2010 and 111 crore Aadhaar numbers were issued to the residents of India.
• The Aadhaar enrollment process is designed to allow anyone to get an Aadhaar without any documents mainly because Aadhaar is meant even for those sleep under the flyover.
• Aadhaar is premised on the infallibility and security of an individual’s bio-metric data is a myth. Debates focused on privacy concerns, security of the database and on the legality of making Aadhaar mandatory are unanswered so far. 
• Aadhaar is not an address proof, since the same was not verified and the entities that uses it as an address proof knows it but chooses to remain silent about it.
• Aadhaar is not a proof of citizenship, but can be used to either apply for a passport or obtain other identity documents that can then be used to apply for a passport.
• Aadhaar card can be downloaded and printed and can be considered “original”. UIDAI expects entities to authenticate the Aadhaar number based on OTP or bio-metrics by connecting to the UIDAI system, prior to usage.
• If UIDAI fixes these problems, they run the risk of Aadhaar's reduced usage and becoming irrelevant in public life. If they stay silent, they run the risk of something may go wrong at a large scale in the future.
• The Supreme Court reaffirmed that Aadhaar can only be a voluntary decision of the individual and that as long as a person is eligible to avail benefits and subsidies, the government cannot deny them those benefits and subsidies because one doesn't have an Aadhaar card. Despite this ruling, the central government decided to push through with these moves.
• The Aadhaar Bill was introduced as a money bill in the Lok Sabha which means that the Rajya Sabha could merely make suggestions and that passage through the Lok Sabha would turn the bill into an Act. This matter is being heard by Supreme Court.
• A survey conducted by Andhra Pradesh government saw 48% respondents citing Aadhaar issues as a reason for them missing out on subsidies and benefits. 
• India deals with frequent cyber attacks from China and Pakistan. Hacking the Aadhaar database would be an easy way for other countries to create disruption within India.
• There are many positives that a system like the Aadhaar will have for India. Aadhaar does make managing benefits easier for India but making it mandatory to avail benefit makes the Aadhaar database a prime target for exploitation. Forcing Aadhaar to be mandatory to file taxes opens up an argument on privacy rights. And the government’s argument of privacy not being fundamental does not help assuage any one.
• Since there is no room to verify whether the bio-metrics have been recorded correctly or not leaves scope for fraud of replacing a person’s bio-metric identity, by the enrollment operator, by uploading someone else’s bio-metrics of another person. 
• The bio-metrics is a changeable entity for reasons of ageing, manual labour, injury, illness, etc. and requires periodic update. There is no means to ascertain whether one or more of the bio-metrics is due for update or not until an authentication failure occurs. 
• Authentication using mobile OTP, as an alternative to bio-metrics failures, is an antithesis to bio-metric identity, as it essentially considers a person’s mobile no. to be his unique ID. In banking transactions OTP is another layer of security for transactions.
• There are many ways to commit an Aadhaar-enabled fraud. The potential gains from Aadhaar related fraud are huge, so we should expect people to invest their time, effort and money to stay ahead of the system.

If King disrespects the law, so will his subjects.

My View:
Aadhaar should be issued to resident citizens with validity of ten years. Foreigners resident in India could be issued Aadhaar with different color and validity of one year. Illegal immigrants must never be issued Aadhaar. The issuing criterion and procedure should be made stringent and infallible like passports & driving licenses. The original Aadhaar card with security features should alone be allowed to be used as ID proof, and address proof should be correlated with a recent document like utility bill or post office issued address proof document. Otherwise the intended objectives achievement failure is likely. In this society ruled and administered by crooks & rogues, fraudsters will always find a way to evade taxes and more and more procedures will only end up in harassing honest and gullible citizens. The recent demonetization is a classic example. Aadhaar is a very good idea, badly designed and even more badly implemented.