A draft civil aviation policy has recommended creation of a standing fund from the revenue earned on taxes on domestic aviation sector to exclusively finance aviation activities in the country.

The recommendation has been made as part of a strategy to mobilise resources since considerable part of the revenue generated through various taxes on the industry like inland air travel tax (IATT) and foreign travel tax (FTT) was going to the central exchequer and not being ploughed back to the industry.

It is estimated that the entire amount of Rs 500 crore collected on account of IATT goes to the national exchequer and only 10 per cent from the FTT is reimbursed to the department of civil aviation.

The civil aviation industry can be run more efficiently and on more sound commercial principles, if the revenue generated through the taxes is spent on its development, according to the policy.

The draft document also suggested that taxes on aviation turbine fuel to subsidise kerosene and very low fares on North East sectors shall have to be considerably reduced, if not totally removed.

The issue of recycling of IATT and FTT in aviation sector for development and creation of necessary infrastructure and facilities has the backing of the parliamentary standing committee on transport.

The committee felt this would generate additional business, which in turn would result in higher tax for national exchequer.

However, the finance ministry had last year shot down the proposal on the grounds that tax revenues formed a part of resources for expenditure of the government, both plan and non-plan, and the receipts from IAAT/FTT could not be pre-empted for financing any particular item.

Notwithstanding the finance ministry's decision, the parliamentary committee has reiterated that the revenue earned from IATT and FTT should be ploughed back for the development of the civil aviation sector.

On issues relating to raising of resources, the draft policy suggested that the Airports Authority of India (AAI) should make all out efforts to maximise the non-aeronautical revenue.

At present, this revenue is of the order of one-third of the total revenue whereas at major international airports abroad, it was as large as 60 per cent to 70 per cent of the total revenue.

The draft policy said wherever airports are operated by the private sector, the owners shall be free to fix the non-aeronautical revenues to make the airport projects commercially viable.

However, the aeronautical charges shall be fixed with the approval of the civil aviation ministry.

The draft recommended that a joint system be developed by the AAI and the defence authorities regarding air traffic system to ensure uniformity in the ATC services, both at civil and defence airports.

The document suggested setting up of a central control unit, where data of all the radars in the country can be received, at a suitable place which shall be manned jointly by defence and civil controllers to monitor the flights from the security point of view.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.