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Modi government's flagship scheme on regional aviation got a massive boost in Union Budget 2018-19 as the government allocation increased by almost five times. For 2018-19, the Centre allocated Rs 10.14 billion (Rs 1,014 crore) against Rs 2 billion (Rs 200 crore) last year.
The boost in fund allocation is likely to solve the problem of scarcity of funds faced by the programme due to the increased number of participating airlines. "Even those who wear 'hawaii chappal' can now travel by 'hawaiijahaj'," said Finance Minister Arun Jaitley in his Budget speech. In order to attract airlines to fly to remote areas, which may be commercially unviable, the government gives VGF (Viability gap funding) under the scheme, besides offering concessions in parking charges at airports.
While the central government contributes 80 per cent of VGF, the remaining comes from state governments. In the case of Northeastern states and Union Territories, the sharing ratio is 90:10.
As reported by Business Standard, the increase in participation from airlines saw the civil aviation ministry in a fix as it faced fund shortage to provide for VGF. Fifteen airline and helicopter operators will operate on 502 routes connecting 70 airports and heliports.
"Finance ministry has permitted AAI (Airports Authority of India) to set aside Rs 2.5 billion (Rs 250 crore) from the dividend it pays to the government, it will be sufficient," Civil Aviation Secretary Rajiv Nayan Choubey said. The government has till now spent Rs 8.33 billion (Rs 833 crore) for UDAN. The total requirement for the second round of UDAN was Rs 6.2 billion (Rs 620 crore).
Jaitley said that the government was preparing the aviation ecosystem to cater to one billion trips per year. This means parking space, slots, and multi-modal connectivity at airports. "In every airport where we can add capacity, we are adding it -- slots, runways or terminal building. If we are planning for five years, we are always playing a catch-up game. By the very nature of government policy work, building a new green-field airport takes 10 to 15 years," Minister of State for Civil Aviation Jayant Sinha had said on Wednesday.