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How history will come full circle if Tatas buy Air India

The Tata’s purchase will also tell the cautionary tale of how unbridled socialism that thrived on rampant corruption stymied private enterprise in India.

, ET Online|
Updated: Jun 21, 2017, 05.10 PM IST
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Watch: Tata Group interested in buying 51% stake in Air India?
NEW DELHI: If Tata Group buys a controlling stake in beleaguered national carrier Air India, as indicated by an ET Now report, the history will come full circle. The airline will go back to a group which had built and nurtured it into one of the world’s finest airlines until grasping and sloppy governments run it into the ground.

The Tata’s purchase will also tell the cautionary tale of how unbridled socialism that thrived on rampant corruption stymied private enterprise in India. It will underline a lesson India has learnt the hard way—the government has no business to be in business.

Tata Sons set up Tata Airlines in 1932. JRD Tata, the legendary entrepreneur, himself flew the first flight between Karachi and Mumbai. In 1946, Tata Airlines became a public company and was renamed Air India.

In 1953, when the government nationalised Air India “through the back door”, as Tata himself put it, it was one of the best airlines in the world. A dream enterprise of Tata, he had built it bit by bit with personal care, down to the menu and curtains. Tata was devastated when he came to know about the decision of then prime minister Jawaharlal Nehru, a Fabian socialist averse to private enterprise. Tata wrote to Nehru: “I can only deplore that so vital a step should have been taken without giving us a proper hearing.”

“Even more than the decision itself, I was upset by the manner in which nationalisation was introduced through the back door without any prior consultation of any kind with the industry,” Tata wrote to a company executive about the nationalisation of his dream project. “However, we have to reconcile ourselves to the fact that we are living in a political and bureaucratic age in which people like ourselves no longer count for much in the scheme of things.”

Yet, Tata accepted to become the nationalised airline’s chairman when Nehru insisted. Air India kept on doing well under him till he was removed in 1977 by then prime minister Morarji Desai.

What Nehru once told Tata came to be prophetic for a large number of public sector units (PSUs)—especially Air India. During a conversation, Nehru rebuked Tata, telling him he hated the mention of the word "profit". When Tata pointed out he was talking about the need of PSUs to make a profit, Nehru said, “Never talk to me about the word profit; it is a dirty word.”

Living up to Nehru’s sentiment, Air India today reels under a debt of about Rs 50,000 crore and has never made a profit in a decade, despite eating up Rs 24,000 crore of a government bailout package. Even Tatas are concerned now over its huge debt.

While there is no certainty if Tatas can turn Air India around if they decide to buy a controlling stake, the purchase will certainly write the concluding chapter of India’s socialist economic experiment—how an ideology kept pulling back a country where business runs in people’s blood.

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