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Only states can decide on aviation fuel tax issue, says Patel

business Updated: Aug 09, 2009 19:23 IST

Civil Aviation Minister Praful Patel has categorically ruled out stepping in to bring down sales tax on aviation fuel as demanded by the aviation industry, and said that it was an issue under the state governments' purview.

"This issue comes under the purview of the state governments and there is not much the central government can do about it," Patel said in an interview to the broadcaster IBN7.

"If it were in the hands of the government, we would have already done it."

His comments came in reply to a question on the contentious issue of aviation fuel sales tax, which cash-strapped carriers say is too high and one of the reasons for them to warn recently that they would suspend operations.

Patel also declined to comment on when he thought the sales tax issue would be resolved.

"This is not in my hands. I called finance ministers of all the states to Delhi for a meeting and requested them. This is not in the hands of the government of India."

He also ruled out any financial aid for the beleagured industry. "No, we will not give a bailout package. Everyone comes out of the problem in its own way."

In explanation, Patel said his "ministry does not have money", and asked rhetorically: "Whose money will I give? From where will I get the money? Private companies will do businesses on their own. When they do business, they keep their earnings with them. They don't give it to the government. So, now when they are in crisis, from where will the government give money?"

He also denied giving a Rs.20,000-crore bailout package to the national carrier, but hinted the government would bring in fresh equity.

"Air India only needs equity. The owner of the company is the government. The owner of Jet Airways brings equity in their company and the owner of Kingfisher brings equity in theirs."

Patel said it was important that "effective and efficient people" sit on the board of Air India, which posted losses of about Rs.5,000 crore last fiscal.

"A new CMD has come and he has tried to bring in new changes in his own style. New ideas will come forward. Often people think that the ministry runs the company, but this is not correct. There are high-level officials, IAS officers and others."

Asked if he thought the bureaucracy was not cooperating with him, the minister said: "No. I think, in the structure we lack the flexibility, which is required for competition with the private sector."

He also refused to be compared to former railways minister Lalu Prasad, who is credited with making the Indian Railways profitable for the first time in its history during the tenure of the previous United Progressive Alliance (UPA) government.

"Why are you saying so? For the last five years you were saying that revolution has come in the aviation sector," Patel responded when a comparison was made with Lalu Prasad.

"The common man can (today) sit in an airplane. New airplanes are coming. India is connecting with the world. But now there are losses. Losses are not because of management. If today 30 percent passengers have decreased, then Air India or Jet Airways cannot do anything."