New Delhi:
There seems to be more trouble for the government from its auditor. The Comptroller and Auditor General's (CAG) report on Air India has slammed the airline's management for a lack of foresight and said the decision to buy new aircraft caused a loss of Rs 200 crore.
The report says the expansion plans of the national carrier were not based on due diligence, and that the new aircraft should have been bought in two phases.
Air India has rejected the CAG's contention that 'defective contracts' led to losses, saying the new aircraft were intended to meet increased demand. The government also says all decisions to buy aircraft were cleared by an Empowered Group of Ministers (EGOM).
The government has also defended its decision to buy 50 aircraft from Boeing saying this led to huge bulk discounts. The CAG, in its report, had observed that in this case 35 aircraft would have sufficed.
The CAG report has looked into the period, from 2005-2010, when Praful Patel was the Civil Aviation Minister. However, Mr Patel's name has not been mentioned in the report.
The CAG report comes a day after the Cabinet Committee on Economic Affairs approved a fresh equity infusion of Rs 1200 crore in the cash-strapped airline.
Air India's 40,000 employees have not received their salary for June and July and performance linked incentives (PLI) from April to July. Currently, the airline is laden with a cumulative debt of Rs 40,000 crore it incurred over aircraft acquisition and as short-term loans to maintain its operations and posted losses around Rs 7,000 crore for the last fiscal.