Narendra Modi govt must fund its social goals, not force private airlines to subsidise regional connectivity

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New Delhi | Published: January 28, 2017 4:52:08 AM

Civil aviation minister Ashok Gajapati Raju may eventually be able to strong-arm private airlines into forking out the regional connectivity levy, but such forced outsourcing of what is solely the government’s job is likely to erode industry’s confidence in policy.

There may be some gain from cheap regional flights—faster connectivity could mean productivity gains—but if the government plans to achieve it with a subsidy, it should be doing it from its own coffers or at least making its “instrumentalities” do the heavy-lifting to generate required funds. (PTI)There may be some gain from cheap regional flights—faster connectivity could mean productivity gains—but if the government plans to achieve it with a subsidy, it should be doing it from its own coffers or at least making its “instrumentalities” do the heavy-lifting to generate required funds. (PTI)

Civil aviation minister Ashok Gajapati Raju may eventually be able to strong-arm private airlines into forking out the regional connectivity levy, but such forced outsourcing of what is solely the government’s job is likely to erode industry’s confidence in policy. As per The Economic Times, the minister warned the airlines that their contention, that the charge was illegal, would not hold up in court. There may be some gain from cheap regional flights—faster connectivity could mean productivity gains—but if the government plans to achieve it with a subsidy, it should be doing it from its own coffers or at least making its “instrumentalities” do the heavy-lifting to generate required funds. Passing on the burden to private sector players, at the very least, impacts their competitiveness—if airlines were to pass it on to fliers, one that has more landings in major airports than a competitor is at a disadvantage. The other option, to pay it themselves, shrinks profits and is a tax by another name.

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The government must meet its social goals on its own or through voluntary association with private sector players—not by it forcing on the latter. Much like the regional flights levy, the mandatory CSR spend, the EWS quota under Right to Education and other such policies lead to declining investor interest as the private sector becomes increasingly wary of the government imposing mandatory welfare costs.

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