The sudden talk of a sell-off of Air India has come as a surprise. By now, most of us had given up on any major action from the government on getting rid of dud PSUs. So far, there has been a certain amount of slow movement on smaller PSUs. Last I heard, out of Niti Ayog's closure list of 26 PSUs, the government had accepted 15. But that was in September last and the closure list was not very relevant in terms of company size or importance. The whole exercise fell squarely in the better-than-nothing category and in any case, hasn't resulted in any action yet.
Given this context, over the last few days, there has been a sudden surge of hints that Air India could be on the block. Or, at the very least, that such a thing was actually not unthinkable. In fact, that's almost exactly the idea that the Finance Minister expressed when he said that if private airlines could serve 86 per cent of the air travel market then they could serve 100 per cent too. He was trying to convince people that Air India should be privatised. He was quoted as saying that, "... sooner the government exits (better it would be). Ideally it should have exited decade and a half ago but that hasn't happened."
In a way, this sounds funny. A high functionary of the government sounds like he's trying to convince us, the public, that Air India should be privatised. In reality, this is the exact opposite of the reality. It's the government that has to convince itself that it shouldn't be running Air India. The rest of us already know that. As someone commented, all you need is one single journey in Air India to know for sure that this airline must be sold off. I would add that you need to be an ordinary member of the public to come to this realisation--elected politicians and bureaucrats apparently have a great experience while flying with 'their' airline. The counterpoint is the Shiv Sena MP but there both the MP and that airline employee were obviously special cases.
I would say that in Air India's case, the government is still behind the curve. As a running business, Air India is worth nothing. No one would travel by it of their own free will at profitable ticket prices. The employees are actively hostile to customers and this culture is beyond fixing. It should just be shut down and its vast assets sold off. The only downside will be a vast increase in self-entitled government types who will make life miserable for private airlines' employees and passengers.
The value of Air India's case lies in the lesson it holds for the government. A business needs entrepreneurship, and it needs owners who actually care about it doing well. Even if one government manages to do something to improve a handful of PSUs a little bit, there's no guarantee that they won't slip right back at some point in the future. The only solution is an expanded version of the Niti Aayog's recommendations, whereby most PSU businesses would be shut down, or sold off.
This has to be done not as a matter of financial convenience, but one of conviction that businesses need entrepreneurship and agility, something that cannot happen in a sarkari environment. The best case in point is Hindustan Photo Films, which is the only photo film company in the world that is yet to react to the fact that photography does not need film any more. There is a criminal waste of resources being used up by PSUs. The benefit of shutting them down will not only be the money realised by sale, and the money saved by not having to support losses, but from the redeployment of resources into productive businesses.
From what Modi himself and many of ministers have said, I'm convinced that there is full understanding in this government that it must get out of business. The diffidence can only be for political reasons--a wariness for starting too many fires at once. Perhaps the time for the great selloff has arrived.
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