Govt departments asked to clear Air India dues immediately, buy air tickets in cash

• Air India Sale: Tata group has stopped extending a credit facility to the government
• FinMin issued a memorandum asking all govt departments to buy Air India tickets in cash and clear all dues immediately

New Delhi: The Finance Ministry on Wednesday issued a memorandum that directs all the central ministries and government departments to clear dues to Air India immediately. The memo has been issued by the Department of Expenditure (DoE). "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 memorandum noted.

On Monday the govt had signed a share purchase agreement with the Tata group for the sale of Air India for Rs 18,000 crore. Since the very next day, the Tata group has stopped extending a credit facility to the government.

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.

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.

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