July 31, 2018 / 10:05 AM / 10 months ago

UPDATE 1-India govt seeks parliament nod for $143 mln capital injection in Air India

* Seeks nod to top up net spending by 59.51 bln rupees in 2018/19

* Air India earlier sought 21.21 bln rupees capital from govt

* Govt move comes after it shelved plans to sell majority stake in carrier (Recasts lede, adds details)

By Nigam Prusty and Manoj Kumar

NEW DELHI, July 31 (Reuters) - The Indian government on Tuesday sought parliament approval to inject 9.8 billion rupees ($142.87 million) in ailing national carrier Air India during the current fiscal year, after efforts to find a buyer for its 76 percent stake in the carrier failed.

The government has “sought funds for infusion of equity in Air India under (its) turn around plan,” a statement tabled in the lower house of parliament said.

To fund the capital infusion in Air India and other sectors, the government has sought parliament’s approval for an additional net spending of 59.51 billion rupees, on top of the budgeted 24.42 trillion rupees for 2018/19.

India last month shelved a plan to sell a majority stake in the beleaguered airline due to lack of interest from bidders, in the latest setback in its ambitious efforts to rescue the carrier that has been kept afloat for years using taxpayer funds.

The sale was also key to Prime Minister Narendra Modi’s plans to help keep the fiscal deficit at 3.3 percent of GDP, a goal already under pressure from giveaways to farmers and other welfare benefits ahead of the 2019 national elections.

An Air India source told Reuters on Monday that it had sought 21.21 billion rupees ($309 million) of additional equity from the government for 2018/19 to make pending payments to its vendors.

Junior Civil Aviation Minister Jayant Sinha had said last month the government will continue to support the loss-making airline’s financial requirements while it works on alternatives. The minister didn’t give a specific timeline for a new plan.

Air India, which employs some 27,000 staff, said this month it was seeking a short-term loan of 10 billion rupees ($148 million) so it can continue day-to-day operations.

The carrier had debt worth 487.81 million rupees ($7.16 billion) as of March 31, 2017. ($1 = 68.6100 Indian rupees) (Editing by Malini Menon & Shri Navaratnam)

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