Will the Upcoming Budget Help the Middle-Class take Flight?

The Modi government instilled big dreams in middle-class Indians with the introduction of the UDAN Scheme (Udega Desh ka Aam Nagrik) in 2016, aimed at developing regional connectivity and making domestic flight tickets affordable. However, the government's flagship program faced a significant setback when Finance Minister Nirmala Sitharaman announced a 60 percent decrease in funds to Rs 502 crore in February's interim budget. Additionally, the Krishi UDAN scheme, introduced to help farmers transport agricultural produce, received no funds.

Despite this reduction in funds, the government maintained that the implementation of air connectivity to tier-two and tier-three cities under the scheme has been extensive. The country’s new Aviation Minister, Ram Mohan Naidu, stated that his aim is to make air travel affordable for all. "With travel returning at pace in India, it has indeed been an exciting period of time for India’s aviation and tourism sectors. To cater to the robust growth in travel volumes, particularly from Tier 2 and Tier 3 cities within the country, 15 airport projects have already been announced across key destinations over the last quarter," said Sumit Prakash, Country Director of India and South Asia, Collinson International. He added that this growth is further complemented by the inauguration of new airports, the development of new terminals at existing airports, and the expansion of flight routes.

While the government has continued its efforts to boost regional connectivity, the success of the schemes has been questionable. Former Minister of State for the Ministry of Civil Aviation, V.K. Singh, stated in a written reply in the Rajya Sabha that out of the 1,300 valid routes under UDAN, 501 were canceled due to reasons such as the shutting down of airlines and the non-readiness of airports. Only 201 routes have completed the prescribed three-year tenure.

Airlines registered with the scheme receive benefits from the central and state governments and the Airport Authority of India in the form of tax concessions, airport charges, and viability gap funding if there is a revenue shortfall while operating on UDAN routes. However, the country’s leading airline, Indigo, cut short the number of flights under the scheme in the previous year.