The Finance Ministry has directed all central ministries and government departments to clear dues to Air India immediately. The Department of Expenditure (DoE) also said that government departments may purchase tickets from Air India in cash only, as the carrier — to be taken over by the Tata group — has stopped extending a credit facility to the government.
“All ministries/departments are directed to clear Air India’s due immediately. Air tickets from Air India, may be purchased in cash until further instructions,” the DoE, under Finance Ministry, said in a memorandum Wednesday.
Under a 2009 memorandum, in any case where the Central government is bearing the cost of air travel for officials including for LTC (leave travel concession), tickets can only be purchased from Air India. Air India officials have previously cited issues of large government dues on account of VVIP travel, evacuation operations and other official travel as part of the reason for working capital issues.
On Monday, the Centre signed a share purchase agreement with the Tata group for sale of Air India for Rs 18,000 crore. The government had earlier this month accepted an offer for Air India by Talace Pvt Ltd, a Tata Sons subsidiary, to pay Rs 2,700 crore cash and take over Rs 15,300 crore of the airline’s debt.