Even as speculation had it that this was merely a bark, and not a bite from the Tata group at the government for its studied inaction on the project approval process, the two sides have, at least on paper, muddled their way through three years and four governments to finally put to rest proposals for a successful alternative to the national domestic air-carrier, Indian Airlines.

As the Tatas announced their withdrawal from the project, investors looked at two sides of the coin.

On one side, they saw a giant pedigreed group unable to force its way through government apathy, corruption and indecision, unable to fathom the political realities of the time it operates in. Even though the Tata groupchairman has recently been drafted on by the prime minister's office on a special advisory board, the group clearly lacks the lobby-lifelines that have pushed through proposals of a far more sensitive nature from private sector groups with ease in the past.

And on the other, the investors saw (some with sighs of relief) the removal of the spectre of huge investment outgoes (the group had committed to pump in Rs 417 crore in straight promoter's equity, accounting for 60 per cent of the capital base of Tata Airlines Pvt Ltd) in an aviation project, when the group is already struggling to put its enormous steel, automobile, information technology and sundry other businesses divided into more than 10 dozen firms in order.

The possibility could still not be discounted that the move was no more than a pressure tactic. The Tata group continues to `re-evaluate' the airport project in spite of an earlier official announcement that it was withdrawing from that project. It is possible that the withdrawal from theairline project will also be similarly qualified later.

Institutional investors will also watch the fact that the Tata group's standing with the government stops short of being able to get a project cleared through as many as four changes of ministers and coalitions. In an economy where government say-so still looms larger than life, investors may treat the episode as a comment on the group's general political adjustment mechanism.

What may filter through this impression is a sense of respect for a group that clearly does not wield its undoubted power to twist arms or grease palms where the Indian set-up requires these to be done. "No other industrial group in India would have failed to push this through, and you have to decide whether you criticise or respect the group for it," said a senior FI Tata-watcher.

The main beneficiary of the Tata withdrawal is of course the national domestic carrier, Indian Airlines, and the entire IA employee-base that relentlessly campaigned against the project. Sincedomestic flyers hardly constitute a sizable political constituency, the sound-bytes from the IA unions and officers alike drowned the Tata group's supporters. For the bureaucracy and especially the civil aviation ministry, Indian Airlines represents a secure fiefdom against which no threats can be brooked. The other beneficiary is Jet Airways, the private sector carrier led by non-resident Indian Naresh Goyal which has grown into the sole viable private sector alternative and is happy to remain just that: the sole alternative.

What the Tata action does, however, is that it forces the government to answer. The civil aviation ministry, and the Foreign Investment Promotion Board must answer, for future reference, why there was such unexplained if not inexplicable delay in project approval. The government and the entire project appraisal mechanism stands exposed as a result as being brutally insensitive to applications made through absolutely legal channels, and as being susceptible to lobbying from bothwithin and without.

If the government feels that the strange Indian Airlines argument that the national aviation situation does not require more participants is correct, it should say so so that future prospective investors are not made to suffer through the horrible appraisal process. Whatever be the case, the Tata group has at least made its move, and left the government with the horrible appraisal process.