CCS Involved To Vet Major Deals Like IA Fleet Plan

New Delhi, July 25: | Updated: Jul 26 2002, 05:30am hrs
The Rs 10,000-crore Indian Airlines (IA) fleet order will be vetted for politico-strategic implications. Accordingly, once the plan is through the established maze of clearances, the final decision will vest with the Cabinet committee on security (CCS). The CCS includes deputy Prime Minister LK Advani, external affairs minister Yashwant Sinha and finance minister Jaswant Singh.

The sub-text is that the government may not want to ink this mega-deal merely on techno-economic input. Involvement of CCS means that considerations of political relationship and national strategy will be incorporated too. The CCS will have to decide on which is the smarter idea: to reward Airbus Industrie representing Europe Inc or Boeing representing the American civil aviation establishment.

Sources said all mega commercial proposals will have to get a stamp of approval by CCS. This is in addition to any major government purchase needing clearance by the respective board, the administrative ministry, the Planning Commission, a committee of secretaries, the public investment board (PIB), the central vigilance commissioner, the comptroller and auditor-general and the Cabinet committee on economic affairs (CCEA).

“The decision (to include CCS) was taken in the wake of the security environment,” a senior government source said. He added that this would help avoid all controversy in future.

IA board had cleared the plan to acquire 43 aircraft from Airbus Industrie in March which was then forwarded to the ministry of civil aviation. But when contacted, minister of civil aviation Shahnawaz Hussain maintained that “the proposal has not come to me as yet”.

Once cleared by the ministry of civil aviation, the proposal will be studied and ratified by the plan expenditure and economic affairs wings in the finance ministry, and Planning Commission. It will then be sent to a pre-PIB committee chaired by the expenditure secretary, and later to PIB. After all these clearances, the proposal will go to CCEA.

The Airbus bid includes a financing option and terms of credit available to IA for buying these 43 aircraft over a period of five years, sources said. Around 90 per cent of the acquisition cost is expected to be funded by overseas borrowings, which may be external commercial borrowings (ECBs) and 10 per cent will be brought in by either domestic loans, equity capital or internal accruals.

“We are yet to study the options, which include loans from overseas lenders, banks or export credit agencies such as Export Credit Guarantee Department of United Kingdom, Coface of France and Hermes of Germany,” sources had earlier stated. IA will replace 19 aircraft comprising 11 Boeing B-747 and eight Airbus A-300 in a phased manner once the deliveries start. The lease of two A-300 aircraft will not be renewed and six A-300 aircraft will retire. FinMin had also cleared a Rs 325-crore equity infusion into IA, which has not been put into effect as yet.