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Tuesday, November 15, 2011

Nationalisation of corporate losses.

The Prime Minister joined the chorus in reiterating that corporations in crisis, like Kingfisher should be helped by the govt. It’s an irony in a country where a huge majority lives below the poverty line, farmers commit suicide & foodgrains rot while inflation runs riot. The PM heads a govt. dedicated to privatise the entire economy & work towards ‘zero’ govt. spending. While, Kingfisher Air, run by the flamboyant & irresponsible Vijay Mallaya, has been driven to near bankruptcy, the Congress led UPA govt. has, with unusual alacrity rose as its white knight. Mallaya, who represents the worst case of conflicting interests in being a parliamentarian & using it to further the fortunes of his business interest, had rushed to the Aviation minister, Valayar Ravi, who was quick to provide him succor & said that the FM would speak to the banks & ask them to bail out Kingfisher.
The banks nudged into saving Kingfisher have come together & decided to take complete control & ring-fence the cashflows. They will put a mechanism where all the earnings will flow into a single account, which will be closely tracked to avert defaults.
While data around the world over the 2 decades have shown that the aviation industry can only survive as a low cost & highly efficient run business, Mallaya chose to go against it, his profligacy subsidized by the ministry in providing profitable routes, PSU banks rolling over his loans, inspite of increasing risk, till it hit rock bottom. Now, this cry for the govt. to bail it out, when the private sector has been all for ‘zero’ govt in business, smacks of the inherent duplicity. In fact, the airline should be investigated for financial irregularities, non-payment of dues to the oil companies, inspite of getting its revenue in full & in advance from its customers.
CPI (M) slammed the central govt. & the private sector for encouraging this nationalization of losses. They further pointed out the impropriety in assuming that the FM could dictate to banks on their business decisions.

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