For the economy to take off we need airlines.

Having been stung by Kingfisher previously oil companies are refusing to supply fuel to SpiceJet, a low cost airline in India. Which meant that all flights were cancelled on Wednesday. Banks are refusing to lend Rs 6 billion to the airline, as requested by the Aviation Ministry, to keep it flying. Strangely the Directorate General of Civil Aviation has allowed the airline to continue to sell tickets for the next 3 months. It may be relevant that the airline belongs to Klanithi Maran who is the brother of Dayanidhi Maran, of the DMK party, who was Telecom Minister from 2004-2007 in the Congress led government in Delhi. Passengers were stranded all over the country and those desperate to travel were being fleeced by other ' low cost ' airlines which were charging up to Rs 25,000 for one way from Delhi to Mumbai. All the airlines in India, except maybe IndiGo, are making heavy losses so the geniuses at Aviation Ministry are thinking of how to make them profitable. So what are their proposals? One is " complete income tax exemption for a fixed period ". Brilliant. When companies are making heavy losses why are they paying income tax? Even ignorant people like us know that corporate taxes are applicable only on profits. Second, banks, which means public sector banks, should charge a maximum of 8% interest on loans to the aviation industry. Already PSU banks are sitting on massive bad loans so forcing them to lend at below par rates to a sick industry is surely asking for trouble. Air India alone has debts of Rs 400 billion so imagine the total for the industry. The third suggestion is to stop airlines offering cheap tickets to customers. We have to remember that politicians and civil servants get to fly for free with ' companions ' so for them it makes no difference. But these are creatures are of infinite cunning. India probably has the most varieties of taxes in the world but most of them are levied at ad velorem basis, which means that tax is calculated on the value of an article and the higher the value the higher the tax. However, when it comes to airline tickets taxes are fixed so that if an airline lowers ticket prices to compete with other airlines the price hardly comes down because of the taxes. Taxes are administered by the Central Board of Direct Taxes which is given a revenue target for the year in the budget. In their effort to achieve their target officers resort to arbitrary demands on companies and individuals and resort to methods which the Gestapo would have been proud of. Naturally, people take refuge in courts. The CBDT has 223, 000 cases pending locking up Rs 4.36 trillion of potential revenue. It loses 70% of such cases. Only lower taxes will revive our economy. Why will tourists come to India if they cannot travel at reasonable prices?