Development

Air India and Indian Airlines – sucking in public funds without any end

The Indian airline industry is going through a period of losses, where the competition between the various airline companies has led to severe losses for many of those involved. So, for example, Kingfisher is facing huge problems in running a full service network, and was unable to run the low cost converted Air Deccan. However, a lot of this is also due to the management and decision making within an organization, and if you consider the performance of the others such as Jet, Indigo and GoAir, you would start to think that the power of good management is key. Both Indigo and GoAir are seen as great performers and even in this loss making industry, they have turned in profits in the past.
The airline industry is a very strange industry, where there are huge capital investments in terms of buying new planes, the pilots to fly these planes are also typically very well paid compared to other industries, the portion of fuel in terms of expenses is very high, and you need to keep on flying planes in a tight turnaround to ensure that you are making more money than you are spending. Further, you need to keep your costs down without compromising on the many regulations necessary to ensure the safety of passengers.
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Growth rate in the Indian economy, and whether the Government has given up on reform ..

For some time now, the Government has been facing trouble in trying to take policy decisions in the area of reform. For a quick history lesson, consider this: In the time period between 2004 and 2009, in the time when UPA-1 was in power, the Congress was in a minority, and depended on a number of parties for support, including the Left, and numerous other parties. Some of these extracted their own pound of flesh, while the Left refused to allow a lot of economic reform, but finally drew the line at the Indo-US nuclear accord. And then came the 2009 elections. In this election, the Congress got an enhanced majority, the BJP did not get much of support, and the Left sort of faded away. The PM made all sorts of announcements about reform, including 100 day targets.
And where are we now ? We have a Government that is in paralysis, where scams and the resultant outrage forcing investigations that are revealing corruption wherever the investigation has touched, leading to a Government, under a supposedly clean Prime Minister, that is known to be the most corrupt Government ever. The list of scams that have come out involve huge sums such as the 2G scam, the CWG scam, and so on. In addition, scams over property, coal allocations, satellite spectrum, and so on are promising a regular spate of problems to the Government. The BJP also is coming out to not be a party with a difference, since the experience in Karnataka is threatening to bestow a corruption tag onto the BJP that the party is not able to overcome.
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The coal scam – one round of outrage, the next when the CAG report comes ..

A few days back, there was a leakage of a report that was supposed to be a draft CAG report on the coal sector. If people were surprised at the number of zeroes outlined in the 2G scam, the coal scam as outlined in the draft CAG report was many times larger, figures that are huge and which also give a sharp reminder of the huge amount of money and benefits controlled by politicians. The report outlined a loss to the public exchequer through the process of granting coal mines to private sector companies, with the allocation of mines being done through the Ministry of Mining, which was also coincidentally one of the portfolios held by the Prime Minister during part of the time period mentioned in the report.
There was some amount of pressure, but then the Government showed portions of a letter from the CAG which quoted his despair at the report being leaked to the media before it was ready, and also that there might be changes in the report based on the ongoing discussion, with the current Minister of the department stating that there was no problem (at least in this particular case they did not blame the report on some policy decisions taken by the NDA Government). Of course, the next day the Times of India published the full text of the CAG letter to the Prime Minister, which sought to portray that the distress of the CAG was over the leakage of the draft report, and that the report did not drastically change from what was published in the draft report.
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