Prior to the current deliberation over the privatisation of India's national carrier, similar attempts were made during the Atal bihari Vajpayee-led government.
However, the situation declined further during the ten-year tenure of the UPA government. Therefore, along with other public sector units (PSUs), Air India is also being considered for privatisation.
"The current CEO of the airline has taken several measures to improve the condition of the airline. Although profits were achieved, the debt payment involved is much too high. Deliberations in this regard are underway," said Panagariya.
The state-owned airline has been plagued by reports of inefficiency and enormous losses for years. It received 4.5 billion dollar bail out from the government in 2012.
The report, which the government will use to evaluate the progress of Air India's restructuring, says Air India failed to meet its cash-credit limits, leading to short-term loans rising to 145.51 billion rupees (2.18 billion dollars) as on March 31, 2016 against a target of 36.46 billion rupees.
It said the airline should monetise more of its assets faster to reduce its debt burden and speed up the leasing of narrow-body aircraft to improve its performance.
"The company, though aware of the shortage of narrow body aircraft as early as May 2010, delayed leasing of A-320 aircraft," the report said, referring to Airbus Group's narrow-body aircraft which is widely used in India.
The privatisation proposal came on October 28, 2011, when a Group of Ministers in the UPA government sat down to decide Air India's fate and approve a bailout package for the carrier.