The cross-holdings between oil and gas companies were defended on the grounds of strategic intent, creating integrated companies to better take on a liberalised business environment. One wonders what justification will be used to defend the offloading of IA stock to financial institutions -- a first step towards the formation of a Japanese style keiretsu system, perhaps?

Whatever be the reasons adduced, the government must keep in mind the stress and strain to which the country's financial institutions are being subjected to at present, before burdening them with yet another millstone round their necks. It is well known that Indian industry is in flux, and the ongoingrestructuring will result in many large corporates, to which financial institutions have lent hundreds of crores, biting the dust. Hardly a propitious time for burdening FIs with a stake in IA. And a burden is precisely what the IA stake will be, given the many difficult problems associated with the airline. It suffers from a cash crunch, urgently needs an injection of funds to replace its ageing fleet, and a VRS programme has to be put in place. Money has somehow to be found for all this.

The saving grace, if it can be called that, is that IA operates in a market where the playing field is deliberately tilted in its favour. The government must carry out the restructuring itself, before divesting its stake -- it shouldn't rely on the FIs to carry the can.