Air India (AI, Mumbai Int'l) is set to receive a INR6.5 billion (USD101.3 million) subsidy from the government in the Fiscal Year 2018-2019, although the majority of these funds will be raised by Air India itself, PTI newswire has reported citing a budgetary presentation made by the government's officials.

The subsidy is less than a half of the INR18 billion which the Indian flag carrier received in the Fiscal Year 2017-2018. The cut is caused primarily by the government's intent to sell a 51% stake in Air India this year.

From the total subsidy, INR5.06 billion will come through the Internal and Extra Budgetary Resources (IEBR) mechanism. Under the terms of this scheme, all funds raised by Indian publicly-owned enterprises, either in the form of operating revenues or through external borrowing, are calculated as part of the subsidy.

Air India has not posted a net profit since 2006 and, according to PTI, accumulated over INR500 billion debt to date.

The Indian government had earlier announced plans to split the holding into four entities to appeal to more bidders. It is also prepared to cover the carrier's unsustainable legacy debt so that the newly privatised airline can have a fresh start.