Patel defends himself,says CAG report 'full of contradictions'

Patel defends himself,says CAG report 'full of contradictions'

"Whatever the government did in its wisdom was to make the airline commercially viable. We had to decide immediately as to whether new planes should be bought otherwise the airline would have closed down," Patel, who was at helm at the civil aviation ministry when it took the purchase decision, told reporters here.

"In 2004, Air India and Indian Airlines had 93 aircraft, most of which were 20 years old. There was no way the airline could have withstood the global competition with these planes," Patel, now the Heavy Industries Minister in UPA-II, added.

His comments came soon after the Comptroller and Auditor General (CAG) questioned the Civil Aviation Ministry's decision to acquire 111 planes for Air India through debt, calling it "a recipe for disaster".

Terming the move for acquiring a "large number" of planes as "risky", CAG in its report tabled in Parliament today, said the aircraft acquisition had "contributed predominantly" to the airline's massive debt liability of Rs 38,423 crore as on March 31 last year. In the report, the government auditor said, "The entire acquisition (for both Air India and Indian Airlines) was to be funded through debt (to be repaid through revenue generation), except for a relatively small equity infusion of Rs 325 crore for Indian Airlines.

"This was a recipe for disaster ab initio and should have raised alarm signals in Ministry of Civil Aviation, Public Investment Board and the Planning Commission," it said.
Patel said that the entire ambit of the government, including the Planning Commission and the Public Investment Board, was involved in the process of fleet acquisition.
CAG said the fleet acquisition process took an "unduly long time", the CAG said the initial proposal was made in December 1996 and its examination continued "in fits and starts" till January 2004 when a plan was made to buy 28 planes, which was revisited and later a decision taken to acquire 68 aircraft.

Patel countered the CAG saying that if 17 months (of completing the aircraft acquisition process) is tearing hurry, "then let us fix some time frame for this process to happen."
The government had also given the sovereign guarantee for this process. Otherwise all airlines have their own funds to buy aircraft, he added.

Further, he termed the entire report as "full of contradictions", and said the Civil Aviation Ministry would suitably reply to the Public Accounts Committee (PAC) on allegations being made by the Opposition.

The CAG said that the entire acquisition (for both Air India and Indian Airlines) was to be funded through debt (to be repaid through revenue generation), except for a relatively small equity infusion of Rs 325 crore for Indian Airlines.

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