Voice from the Rooftop

Blog of Vincent Augustine D'Souza

Kingfisher Airlines and loan

Vijay Mallya is known as king of good times. He owns an IPL team. He owns a Formula One team. He constructs a multi-storeyed building beside a road named after his father. He hires models and has photoshoots outside India for his calendar. For all that he has money. He has no money to pay loan taken by Kingfisher Airlines which he owns. The airline has a loan of 6,000 crore rupees and he wants government to bail him out. Civil Aviation Minister Vayalar Ravi is ready to help him. Vayalar Ravi said “The aviation industry is facing crisis. These carriers may be privately owned but are Indian carriers, and the ministry will have to watch out for them.”

Kingfisher Airlines had defaulted on payment of oil bills. Some flights were cancelled and the airline was put on cash-and-carry system.

This is not the first time Vijay Mallya has approached the government for a bail out. Previously Kingfisher Airlines had a debt of over 7,000 crore rupees and State Bank of India, Bank of Baroda, Punjab National Bank, ICICI Bank, IDBI Bank and some other banks converted part of loan into shares at Rs.64.48 when the market price was around Rs.48. On remaining loan interest was lowered to 11% and repayment period was extended to nine years.

Public sector banks are the property of the people of India. They are not the property of the government. Ministers should know that. For too long there has been privatization of profits and nationalization of losses. Companies that make losses should be allowed to shutdown or go bankrupt. Board for Industrial and Financial Reconstruction should be wound up. Robbing the poor to pay the rich should stop. Vijay Mallya should pay the loan as per the terms agreed for borrowing. There should be no interest reduction or extension of payment period or conversion of loan into shares. Credit rating agencies have brought down the rating of State Bank of India. Vijay Mallya can pay from United Breweries or other companies. He can sell aeroplanes he owns. He can continue to be king of good times but not at the expense of India’s taxpayers.

Kingfisher Airlines said they had not requested for restructuring of second debt? Did they ask for loan write-off or conversion of loan into shares?

Vayalar Ravi should concentrate on Air India which has become a black hole gobbling up money. It has loans amounting to 40,000 crore rupees and there is no sign of improvement. Pilots and other frequently go on strike. No more loan should be given to Air India and if employees do not behave the airline should be shutdown. It is for the aviation industry to face the crisis and the ministry does not have to watch out for private Indian airlines.

India needs a movement stronger than Occupy Wall Street. Protesters should occupy offices of ministers, corporates and banks against such practices.

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