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CAGed by its contradictions

Air India has too many conflicting roles to play, it's time to clear its flight path

india Updated: Sep 11, 2011 20:59 IST

First off, in its audit of Air India, the Comptroller and Auditor General (CAG) has not uncovered any lies or deviations from due process. Books have not been cooked, policy has not been short-circuited, and all three controversial decisions regarding the airline were taken collectively by the cabinet. Air India needed more planes to stay relevant in the newly-opened

Indian sky of 2005. The case for merging Indian Airlines with Air India, made out by independent consultants, is still strong from a business standpoint. And successive governments have been opening up bits and pieces of the Indian aviation sector - the world as a whole is freeing the skies. The auditor questions the haste in the first, the approach in the second and the timing of the third. All three can be defended as bad judgement, certainly not a hanging crime.

Praful Patel, under whose watch as aviation minister the unfortunate decisions were taken, is correct when he says the government's auditor relies on wisdom in hindsight and contradicts itself. Auditing, by its nature, is an endeavour to learn from past mistakes, so Mr Patel and his colleagues in the cabinet ought to treat the CAG report with the respect it deserves. The contradictions that have crept into the CAG's observations are not the result of an auditor's befuddlement: they arise from the conflict of interest among the various hats the Indian aviation minister is required to wear. As owner of Air India, the aviation ministry needs to look out for the commercial interests of the taxpayer-funded carrier. This is in direct conflict with the ministry's job of keeping the airline business competitive. As is, sometimes, its responsibility to ensure the growth of the aviation sector. Other countries have untied these knots by privatising State-owned airlines and appointing independent airline and airport regulators.

The CAG is punching above its weight when it tells the government to freeze bilateral agreements on flying routes or to lay off micro-managing Air India. Although these are eminently sensible suggestions, the audit of an airline must not spill over into an audit of Cabinet decision-making. The latter is the prerogative of the voter, not an auditor, even if it acquires the wherewithal to conduct economic and social impact assessments of government policy. Unfortunately, our courts and auditors are having to tell the government what it ought to be doing, however constitutionally untenable such observations may be. Voices for systemic changes are getting more insistent, in this case for a long-overdue reform of the Indian aviation sector.