Government's Cash Cows

When reports of Hindustan Aeronautics Ltd, or HAL, using an overdraft of Rs 926 crore to pay salaries to staff came out, all hell broke loose. The financial health of HAL already under media glare due to the controversy over the alleged Rafale scam became a new battleground between the government and the Opposition which, along with the employee unions, criticised the government for stripping the strategically important company of resources at a time its capability to make cutting edge defence equipment was being questioned.

They were not far off the mark. In 2017/18, HAL had paid the government, which holds a 90 per cent stake in the company, a dividend of Rs 1,165 crore and bought back shares worth Rs 1,126 crore. The employee union was particularly critical of the government for making the company pay around Rs 6,400 crore through share buybacks over two years (Rs 5,265 crore in 2016/17 and Rs 1,128 crore in 2017/18), apart from the