Air India’s warning that it will delay June salaries by a fortnight and ask its senior managers to forgo a month’s wage is a rude jolt to a smug workforce that somehow seemed unconcerned that the once-proud maharaja is now all rags and tatters. A 30,000 passengers flown a day and over 31,000 staff ratio is ridiculous,
Over the years, the airline has been slipping into a black hole that epitomised operational inefficiency, poor customer service and mismanagement. When competition from private carriers gradually gained in intensity, the inadequacies of public sector carrier were further exposed. During the passenger boom two years ago, the airline lost customers because it had ageing aircraft, lacklustre service and rude stewardesses. What has emerged clearly though is that the Government has neither the desire nor the ideas to make the airline a winner. BL 200609

Air India losing Rs 14-15 cr a day. The airline is in the midst of a massive fleet expansion which entails inducting 111 Airbus and Boeing aircraft at an estimated cost of about Rs 45,000 crore at a time when the market has bottomed out. The airline is working on financial proposal t is also looking to the Government, which is the major shareholder seeking Rs 14,000 crore including Rs 7,000 crore as a soft loan, increase inequity to Rs 5,000 crore from the current Rs 145 crore. The airline, for the first time in its more than 75-year history, has delayed the payment of June salaries and productivity-linked incentives to its 31,500 employees. Sources indicated that while the Government will eventually bail out Air India, as it is the country’s flag carrier, What is the wisdom of keeping bureaucratically administered, Air India in the public sector. It is incurring huge losses and needs Rs 15,000 crore of public money to carry on at a time when the true fiscal deficit is reaching levels not seen since 1991. It is obvious that the funding needed by Air India (and other PSUs too: there are 33 loss making ones which have so far received cash and non-cash support of the order of Rs 30,000 crore. The big problem is the bureaucratic culture from which too many of our public enterprises and schemes suffer from — and one cost a bureaucracy never understands is opportunity cost. Recently, a Hong Kong based consulting firm undertook a survey of the efficiency of civil servants in 12 Asian economies. Singapore came first and India last, trailing Indonesia and Philippines. Too much of our bureaucracy is not only inefficient and corrupt, but it is all-pervasive in its influence; even most of the supposedly independent regulators are manned by retired bureaucrats. Another characteristic of our bureaucracy is its complete lack of accountability for anything it does or does not do. And, liberalisation of the economy over the last couple of decades has not really reduced the power of the bureaucracy. As for competence, consider one recent example: the utter confusion following the notification of guidelines on as important an issue as foreign direct investment. Is anybody accountable?

Five years back, on coming to power, Prime Minister Manmohan Singh had made a commitment to giving priority to administrative reform and improved governance. He has been unable to do anything worthwhile on the issue in his first term. Would he get any better results in the second? The public sector will never get the autonomy it badly needs because the netas and babus will not give up the powers of control over the units, both for personal benefit and for patronage. And, so long as the bureaucratic stranglehold remains, it will breed complacent, not “learning”, organisational cultures.  Apart from fiscal resources going to the public sector and starving more vital social services and welfare schemes, it is high time we recognise that the government’s managerial/administrative capabilities are nowhere near performing the minimum functions a state needs to with a modicum of efficiency.