The Covid-19 had created a huge impact on the Indian economy and the lockdown due to the second wave had left a lot of people unemployed and a lot of businesses around the country to be closed down. However, the Government has announced various Economic Reliefs to boost the economy concentrating on various businesses and startups. In this article let’s look at more information on the Economic Relief Measures.
The Finance Minister of the country, Nirmala Sitharaman had addressed the press conference on 28 June 2021 and has discussed about various economic relief measures. The Finance Minister has addressed various reliefs for the sectors affected due to Covid-19.
ECONOMIC RELIEF MEASURES announcements by Hon. FM @nsitharaman
— Office of Mr. Anurag Thakur (@Anurag_Office) June 28, 2021
Loan Guarantee Scheme
The Finance Minister has announced a Loan Guarantee Scheme for the affected sectors due to Covid-19 of around INR 1.1 lakh crore. The Government will provide a guarantee coverage that is 70% for new projects and around 50% for the expansion and the duration for the guarantee will be up to 3 years.
This is concentrated on the health sectors and medical infra specially targeting the underserved areas would get an amount of INR 50,000 crore. Other sectors would get INR 60,000 crore and the interest rates would be around 8.25 % p.a.
ECLGS
The Emergency Credit Line Guarantee Scheme of an additional INR 1.5 lakh crore has been announced. The coverage on Contact-Intensive sectors will be continued and the loan amount that is proposed and the limit of admissible guarantee is expected to increase above 20%.
Support to the Tourism Industry
The Government has announced to provide support to the tourism industry by providing monetary support to more than 11,000 travel and tourism stakeholders and tourist guides. The tourism sector will also be provided with loans under the new loan guarantee scheme for areas affected due to Covid.
The Government has announced that it would provide loans that are 100% guaranteed up to INR 10 lakhs for the Travel and Tourism sector agencies and an amount up to 1 lakh for the licensed tourist guides.
The Finance Minister also announced that they would provide free tourist visas and conveyed that once the issuance of visas is restarted the first 5 lakh visas will be issued free of cost and that is offer will be available only once per person. This scheme will be valid till 31 March 2022 or until the number reached 5 lakh tourists.
The Atmanirbhar Bharat Rozgar Yojana has been extended from 30 June 2021 to 21 March 2022. The scheme provides incentives for the employers in order to increase the new employment opportunities through EPPFO.
The Government has also approved an outlay of INR 22,810 crore that is expected to benefit around 58.50 lakh beneficiaries by providing them with a monthly wage of around INR 15,000. So far, the benefits of around INR 902 crore have been given to around 79,577 beneficiary establishments.
Nirmala Sitharaman also stated through the press release that through this scheme from the last October until 18 June 2021 around 2.14 million people have been benefited from around 79,577 establishments.
Subsidy on Fertilizers
An additional subsidy for P&K fertilizers and DAP fertilizers has been announced. The NBS subsidy has been increased to INR 42,275 crore in the FY 2021-22 from INR 27,000 crore in the FY 2020-21. An additional amount of INR 14,755 crore is announced to be provided for DAP as well as NPK based complex fertilizers.
The Government has also conveyed that an amount of INR 85,413 crores has been paid to the farmers.
Underwriting of Additional Projects
The Finance Minister also said that there would be underwriting of the additional export projects through the EXIM bank that is worth around INR 33,000 crore. The Minister also conveyed that in the span of the next 5 years there would be an equity infusion in the Export Credit Guarantee Corp of INR 88,000 crore.
Other Economic Relief Measures
Some of the other announcements during the press release include providing a viability gap funding of INR 19,041 crore for broadband connectivity in villages through Public Private partnerships, flexibility in claiming incentives linked to production by the large-scale electronics manufacturers, etc.
Conclusion
Narendra Modi, the Prime Minister of India had tweeted that the announcements will help in stimulating the economic activities, boost the production and increase the exports as well as increase the employment opportunities.
FAQ
How did Covid 19 impacted Indian economy?
The economic impact of the COVID-19 pandemic in India has been largely disruptive. India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1%
Is the Visa free under the Economic relief measure by the government?
The first 5 lakh visas will be issued free of cost and the offer is only available once per person.
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The Jet Airways case study is now so popular that it is mentioned in almost every Business School's curriculum due to the airline's unimaginable debacle. Founder Naresh Goyal has been investigated by the Enforcement Directorate (ED) and a large number of ex-employees have remained jobless after the airline shut down its operations in April 2019. April 2020 reports revealed that around 4000 employees were still on the rolls of Jet Airways, and these employees were facing tough times in the absence of any regular source of income.
Jet Airways' shutdown is often considered one of the biggest organizational failures to have occurred in India. A lesson for many, this post covers the journey of Jet Airways and digs deep into the reasons for its failure. If you ever wondered, "Is Jet Airways coming back?"—the answer was yes, until the Supreme Court’s recent order in November 2024 for its liquidation.
After its collapse, Jet Airways declared bankruptcy, and on 17 April 2019, it decided to shut down operations temporarily. Some of its assets have gone to other airlines while a few aircraft remain parked till the bankruptcy proceedings are completed.
In this Jet Airways case study, we will delve into the Jet Airways insolvency case, which will cover the Jet Airways introduction, the history of Jet Airways, the downfall of Jet Airways, and the hopes for resuming its operations and the final descent. So, let's get started!
Aviation is an under-saturated sector in India. As more and more Indians choose flight as the best means of travel, the availability of aircraft is yet to catch up with this growing trend. For the numbers, India has 771 commercial aircraft for a population of over 1.4 billion.
To add to the aviation industry's woes, the majority of Indian airports are not up to the mark in terms of infrastructure. For instance, most of the airports in India have only a single operational runway, whereas countries like the US have no less than 5 runways.
Naresh Goyal started Jet Airways with 4 leased Boeing 737 aircraft in 1993. The airline was the paragon of success for domestic carriers in India. There were rumblings of trouble brewing within Jet Airways in August of 2018 when the company deferred the second quarter results of that year.
The government watchdogs got a sniff of discrepancies in the airline's financials. In the same month, the DGCA (Directorate General of Civil Aviation) conducted a financial audit of Jet Airways. It was based on the reasoning that the deferment of employees’ salaries ought to affect their morale and attitude.
The same month, Jet Airways posted a loss of INR 1323 crores.
In September of 2018, the Income Tax department surveyed the Delhi and Mumbai offices of Jet Airways. The company was then accused of financial misappropriation. Naresh Goyal, who was then the Founder-Chairman of Jet Airways, also came under the radar of the government and its law enforcement agencies. He and his wife, Anita Goyal stepped down from Jet Airways' operations on March 25th, 2019, after the financial crisis that the airline company was in, came in front of everyone.
Jet Airways founder Naresh Goyal and his wife Anita, were stopped from leaving India by immigration authorities at Mumbai airport. They were offloaded from a Dubai-bound Emirates flight, which was called back after it had reached the taxiway at Mumbai airport on May 25, 2019, since then, he was stopped from flying out of India.
There were charges of money laundering and foreign exchange violation against Naresh, and this led the Enforcement Directorate to question him in September 2019. He was detained and questioned again by the ED in 2020.
Legal Challenges and Bail
In 2023, Goyal was accused by Canara Bank of defrauding them of INR 538.62 crore. He was arrested by the Enforcement Directorate (ED) in September 2023 for using company funds for personal expenses. His wife, Anita, was also arrested in November 2023 but got bail due to health reasons. Unfortunately, Anita passed away on May 16, 2024. On November 11, 2024, the Mumbai High Court granted Goyal permanent medical bail for his cancer treatment. He had been on temporary bail before, which was extended several times. The ED opposed it, saying he could get treatment in jail, but the court allowed him to seek care outside.
The Consequences of the Downfall of Jet Airways
Jet Airways shut down its operations temporarily on 17 April 2019. The last flight was from Amritsar to Mumbai. The shutting down of the company affected 20,000 employees and more than 60,000 people indirectly. At the time of its closure, Jet Airways was reported to be in debt by over a billion dollars. NAG (National Aviator’s Guild) appealed to the PMO (Prime Minister’s Office) and then-Civil Aviation Minister Suresh Prabhu to help the company and its employees.
Jet Airways Employees Pleading with the Government to Save the Company
The government on the other hand reportedly asked the banks to save the company without pushing it to bankruptcy. With unemployment being a major electoral issue for the government, an addition of 20000 to the list of jobless Indians will only give more substance to the opposition. The Government was therefore pulling out all the stops to prevent Jet Airway's insolvency.
Jet Airways Employees Lit Candles, Pleaded the Govt. to Save the Company and Their Jobs
Consequences have been of such an unprecedented level that an employee of Jet Airways committed suicide in Mumbai. Shailesh Singh was a cancer patient and was on a break from his job as a senior technician at Jet Airways. He jumped from his building due to depression on 27 April 2019.
It is not the first time that an airline company has fallen from grace. Many companies before Jet Airways have seen a similar fate. Some of them are:
Kingfisher Airlines
Air Deccan
Air India Cargo
Indian Airlines
Sahara Airlines
The Common Link In All Of These Cases
The common link in all of the above examples is that they all were, at some point, involved in a merger.
Deccan Airlines Plane
Kingfisher Airlines bought Air Deccan. Kingfisher was a full-service airline, whereas Air Deccan was a low-cost airline. When Kingfisher bought Air Deccan, it incorporated some changes in Air Deccan’s fleet and we all know what happened after that. Both the companies faced a downfall.
Before Air India and Indian Airlines merged, both of them were doing reasonably well. However, after the merger, Air India has struggled financially, with mounting debt and operational issues. As of 2021, Air India's debt stood at over ₹61,000 crores, and despite the government's efforts to revive the airline, it has yet to return to profitability.
Jet Airways merged with Sahara Airlines and Jet rebranded Sahara as “Jet Lite”. Over time, Sahara Airlines faded into oblivion, and Jet Airways, despite its initial success, later faced a similar downfall, eventually shutting down its operations in 2019.
Therefore, it won't be wrong to say that mergers and acquisitions in the case of airlines are a risky bet. A successful airline establishes a unique identity of its own, and meddling with its brand and presence usually ends on a negative note.
There are many reasons behind the failure of Jet Airways:
Merger
The merger between Sahara Airlines and Jet Airways was a mistake on Jet Airways' part. Sahara was acquired by Jet Airways for $500 million which was way above what the airline was worth.
JetLite Plane
Rebranding Sahara Airlines
Jet Airways renamed Sahara Airways as JetLite. Sahara at the time was a powerhouse with its name on every Indian's tongue. The rebranding cost Jet Airways a major chunk of its customers; flyers who were attracted to the Sahara brand image couldn't resonate with JetLite.
Mismanagement
Every company and organization rests on the abilities of its management board; there are no second opinions to this school of thought. Naresh Goyal, the founder of Jet Airways, decided to become a one-man army for Jet Airways and did not hire a sound management committee to assist him in running the airline. Insiders often talk about his poor financial acumen. He relied on a single management team to handle all the operations related to Jet. Understanding that specialized teams are needed to run different departments is no rocket science. And when you acquire one more airline, you can't rely on your existing management board that's already burdened to take up additional responsibilities!
Jet Airways' Founder and Former Chairman, Naresh Goyal
Full-Service Airline
Full-service airlines offer passengers the choices of economy, business class, premium economy, and first class on their flights. The company was operating as a full-service airline. Operating as a full-service airline in India is not an easy task. One needs formidable financial support and customer relationships. Catering to the wealthy, the middle class and the lower sections of Indian society requires strategy and operational excellence beyond imagination. That is why most of the companies focus on the middle-class segment and keep the prices as low as possible. Jet Airways was biting off more than it could chew.
Drowning in Debt
Jet Airways was never good with money. It kept on incurring debt and spending more than its revenue. The employees were paid lavishly when compared to the industry standards. For the sake of providing comfort and luxury, the Naresh Goyal-backed airline compromised with finances.
Jason Unsworth, a British Entrepreneur, and CEO of Atmosphere Intercontinental Airline, expressed his interest in buying a controlling stake in Jet Airways.
However, Jason was told by Jet Airways to sit down with SBI Caps Limited, which was leading the resolution plan for the carrier.
Jason claims to have written to Jet Airways’ lenders but never received any reply in return. He later wrote to Jet Airways’ CEO, Vinay Dube, about the proposal to purchase a stake in the airline. Jason said he was provided with contacts of SBI to get in touch with. He was also in talks with other Indian entrepreneurs and investors for financing his bid for a controlling stake in Jet Airways.
The winner of the Jet Airways bid was the Kalrock and Jalan consortium, which had proposed a total cash infusion of INR 1375 crore, which included INR 475 crore that will go to meet the stakeholders' payments and of the other financial creditors.
Jet Airways 2.0 Vision
On 18 October 2020, the lenders of Jet Airways approved the resolution plan submitted by UK-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan to revive and operate Jet Airways.
“The Consortium's vision was to regain lost ground and set new benchmarks for the airline industry with the tag of being the best corporate full-service airline operating on domestic and international routes. The Jet 2.0 hubs will remain in Delhi, Mumbai, and Bengaluru like before. The revival plan proposed to support Tier 2 and Tier 3 cities by creating sub-hubs in such cities," the official statement noted.
The new management’s vision for Jet 2.0 was inclined towards increasing cargo services to include dedicated freighter service, an underserved market for Indian carriers. "Given India’s position as a leading center for global vaccine manufacture, cargo services have never been more required," the statement added.
In 2020, UK-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan submitted a resolution plan to revive Jet Airways. The Committee of Creditors approved the plan in October 2020, and the National Company Law Tribunal (NCLT) approved it in June 2021. The Jalan-Kalrock Consortium aimed to revive the airline, which had been grounded since April 2019 after financial troubles.
Acquisition and Ownership Transfer
In 2021, the Jalan-Kalrock Consortium officially won the bid to take over Jet Airways. However, several steps were required to complete the transfer. The consortium was given 90 days to complete the ownership transfer, which included securing certain properties, issuing Jet Airways shares to the consortium, and repaying creditors.
Approval and Operations Preparation
The Union Home Ministry granted security clearance to Jet Airways in 2022. A test flight on May 5, 2022, was conducted to prove operational readiness, followed by other proving flights required by the Directorate General of Civil Aviation (DGCA) for the air operator certificate. The airline planned to relaunch with hubs in Delhi, Mumbai, and Bengaluru, focusing on both passenger and cargo services.
Historical Significance and Revival Vision
Jet Airways, once India’s largest private airline, had operated successfully for over two decades before grounding operations in 2019, affecting around 20,000 employees. The consortium aimed to leverage the brand’s strong customer connections. Plans included supporting Tier 2 and Tier 3 cities by creating sub-hubs and introducing dedicated freighter services to address India’s increasing cargo needs.
Financial and Legal Challenges
The revival faced delays due to the COVID-19 pandemic, financial challenges, and leadership changes. Despite these setbacks, the consortium remained hopeful, with Jet Airways’ shares surging by 5% in September 2021. However, Punjab National Bank, one of the creditors, later filed an appeal against the resolution plan with the National Company Law Appellate Tribunal (NCLAT), citing irregularities.
Hopes for a Comeback in 2024
In September 2023, the Jalan-Kalrock Consortium injected an additional $12 million, furthering its commitment to reviving Jet Airways by 2024. However, on November 7, 2024, India's Supreme Court ordered the liquidation of Jet Airways, officially ending the airline’s revival efforts more than five years after it had gone bankrupt.
Legacy and Closure
The Supreme Court’s decision effectively closed the chapter on Jet Airways’ comeback efforts. Despite its strong brand value and previous successes, the airline was ultimately unable to overcome the financial and operational challenges that led to its liquidation.
As reported in March 2020, the bidders who issued an Express of Interest (EoI) to buy Jet Airways did not submit any resolution plan adhering to the requirements. As confirmed, the grounded airline did not find any buyer till 9 March 2020.
By March 2020, around 20,000 claims were made on Jet Airways which amounted to around INR 37,000 crores. Of these claims, workmen and employees sought over INR 14,000 crores, while creditors were claiming more than INR 11,000 crores from the airline.
While looking at this scenario, it seemed like the Jet Airways saga would come to an end soon. The Indian Government's role was pivotal in deciding the course this crisis ultimately takes. However, with the advancement in 2023, powered by the Kalrock-Jalan consortium, things seemed to be looking up at last for Jet Airways.
As of September 2023, Jet Airways was getting ready to fly again in 2024. The airline's parent company, the Jalan-Kalrock consortium, had invested another $12 million, fulfilling their promise to bring the airline back to life.
This consortium, which took over Jet Airways in 2020, had a plan. They wanted to restart the airline and fully control its operations.
But then, India's Supreme Court decided that Jet Airways should be liquidated. This decision ended any chance of the airline coming back, more than five years after it went bankrupt. In the end, Jet Airways' hope for a comeback was officially over.
FAQs
What is Jet Airways?
Jet Airways is an Indian International airline service provider that was founded on April 1, 1992, and headquartered in Delhi NCR. It commenced its operations on May 5, 1993.
Who founded Jet Airways?
The NRI Indian businessman, Naresh Goyal founded Jet Airways, who was also the Chairman of the airline company.
Why Jet Airways failed?
There are numerous reasons that propelled the downfall of Jet Airways but the most prominent reason for the Jet Airways shutdown is the lack of funds and mounting debt.
What is the Jet Airways insolvency case?
Jet Airways, which started off as an air taxi operator in 1993, was under insolvency for nearly 2 years after which it ceased its operations in April 2019, when it revealed the huge debt that it was in. The insolvency resolution plan was eventually brought up by UK-based Kalrock Capital and the UAE-based entrepreneur Murari Lal Jalan, which looked promising enough, and it is the same consortium that is finally proving promising enough for Jet Airways today.
Is Jet Airways coming back?
Yes, the news was true, for Jet Airways was coming back indeed for operations until the Supreme Court ordered the liquidation of Jet Airways on November 7, 2024, officially ending any hopes of reviving the airline over five years after it went bankrupt.
McDonald's is a name that is universally known for its golden arches and tasty burgers. It had made its mark in Russia too, without any exception to such an extent that the sales in Russia and Ukraine constituted 9% of their global revenue. However, The American fast-food giant has withdrawn its operations in Russia.
After closing down its restaurants on March 14, 2022, on May 16, McDonald's announced that it will leave the Russian market citing humanitarian concerns in the backdrop of the Russian war over Ukraine.
They had established their first outlet in Moscow in 1990 just before the disintegration of the Soviet Union. The launch of McDonald’s outlet came as an ice breaker during the cold war tensions.
After that, Russia opened up its economy to the west which lead to further expansion of the food chain. As of 2022, McDonald's had directly owned 850 restaurants across the length and breadth of Russia.
Citing the withdrawal of McDonald's from Russia, CEO Chris Kempczinski said the “dedication and loyalty to McDonald’s employees and hundreds of Russian suppliers made it a difficult decision to leave. However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the arches shining there.” The pull-out of Mcdonald's adding to the western sanctions imposed on Russia implies the global isolationism that the country is facing.
All the restaurants that were hitherto operated by McDonald's were rebranded. Alexander Govor who was in charge of the operations of over 25 outlets took over the restaurants and staff.
On 12th June, one of the McDonald's outlets was reopened to the Russians under Russian leadership as “Vkusno - i tochka” which is translated as “Tasty and That’s it”. Just like how it had symbolically cooled off cold war tensions, the current rebranding is representative of the new world order.
Although anything symbolising the brand was removed and rebranded, the machinery and other equipment remain the same. The prices are much lesser than before and as per the responses, the taste remained the same. However, Vkusno- i tochka will not provide the classic big Mac.
Oleg Paroev, chief executive of Vkusno- i tochka has revealed that the firm plans to reopen at least 200 outlets by the end of June and 850 by the end of summer. Alexander Govor, the current owner of the food chain has said that they will invest 5 billion Roubles this year which will employ at least 51,000 people. Earlier, McDonald's had employed nearly 62,000 people.
Who Is the Current Owner of McDonald’s Now?
Through the firm Gid LLC, the Siberian businessman Alexander Govor has taken over the business of all the McDonald's outlets. He has been a McDonald's licensee since 2015 and has played a significant role in the expansion of McDonald's outlets into the inner and remote regions of Siberia.
McDonald's Russia's new owner - Alexander Govor
Russian authorities have announced that the American food chain will also have an option to buy back its restaurants in the next 15 years. The money involved in the deal has not been revealed by the firm till now although it is speculated to cross $1.4 billion. Notwithstanding the change of ownership, Govor is expected to retain all the employees and pay them salaries for two years at least.
The New Name of McDonald's in Russia
As a part of stripping the new outlets of anything that remotely resembled the old food chain, they have revamped their logo too. The new logo stands in front of a green background representing the letter M made by two fries and a hamburger.
Vkusno - i Tochka Logo
The green background, according to their press office represents "the quality of products and service that guests are accustomed to." The name and the logo were revealed only a few hours before they opened up for the public.
Opening of New Vkusno - i Tochka Outlets
Queue Outside McDonald's new Rebranded Restaurant Vkusno - i tochka
The first outlet was opened in Pushkinskaya Square, Moscow. It was also the first in the restaurant of McDonald's in Russia in 1990. The firm claims to have sold 30,000 burgers.
The outlet had to remain open for long hours to serve the large crowd. However, the popular commentary has been that the queues outside the outlet were much shorter than what it was thirty years ago. 15 more outlets are to be opened in the capital soon before it reopens the other centres by the end of summer.
Menu of Vkusno - i Tochka
Along with the Big Mac, burgers and desserts including McFlurry have been omitted from the menu. Cheeseburgers among others have seen a decline in prices from 160 rubles to 129 roubles and fish burgers from 190 Roubles to 169 Roubles.
The menu as a whole is much smaller than the older one. Most of the ingredients are sourced from within Russia. However, the firm faces some logistical issues with regard to the availability of certain things. For instance, Vkusno - i tochka is in search of new suppliers for soft drinks as Coco-Cola has suspended its operations in the country.
The withdrawal of McDonald’s from the Russian market and its complete rebranding in the country is a test of time for the country to prove its vigour and efficiency. With the global situation turning hostile towards Russia, the possibilities of the return of the American food conglomerate seem rather bleak. Hence the new firm has to step in more responsibly to retain business.
Chief Executive Oleg Paroev has already said that their primary goal is to ensure that the customers do not feel any differences at all in terms of the taste and quality of the food. It is interesting to note that the interiors of these outlets are kept the same as before.
As western sanctions keep mounting on the Russian economy, it is time for the country to be self-sufficient and sustain itself amidst the global hostility. The efficient management and expansion of the old McDonald's outlets in the name Vkusno- i tochka will be a competitive test which can be determinants of change that marks the future of the Russian economy that has unfortunately earned the hatred of the world. Now it is for the rebranded firm under the leadership of Alexander Govor and Oleg Paroev to retain the legacy left by McDonald's.
FAQs
Is McDonald's back in Russia?
No, Alexander Gorov, a Siberian businessman bought all the McDonald's in Russia and rebranded them. The rebranded outlets are now called Vkusno-i tochka.
Who bought McDonald's in Russia?
Alexander Gorov, a Siberian businessman bought all the McDonald's in Russia.
Alan Joseph
