The Air India catastrophe should catalyse deep structural reform

India needs to ponder questions of ownership, market concentration and conglomerate diversification for balanced growth

- Vikas Dimble & Prachi Mishra are, respectively, operations director, Isaac Center for Public Policy (ICPP); and professor of economics and director of ICPP, Ashoka University.

The tragic Ahmedabad air crash shook the nation, but beyond the immediate grief lies a deeper call for introspection. This isn't about assigning blame, but rather about examining structural questions. The timing is significant—this accident occurred soon after Air India transitioned from public to private ownership, highlighting three fundamental challenges on India's runway toward developed nation status: How should we balance public and private sector roles? What is the optimal level of market concentration versus competition? And should India Inc embrace specialization or continue with diversified conglomerates that span multiple industries?

These questions go beyond aviation, touching the very foundation of India's economic strategy. Yet, aviation provides a perfect case study for examining these broader challenges. Let us start with the public versus public ownership.

India is conspicuous with a disproportionately large public sector, compared to other emerging and advanced economies. India's stock market is heavily dominated by state-owned enterprises. But our aviation sector, which has undergone complete privatization, offers a contrast.

Globally, aviation ownership models vary dramatically. West Asian carriers remain fully government-owned, Chinese airlines are government-dominated and some European carriers maintain partial government stakes—25% of British Airways' parent company, for instance, is owned by Qatar Airways. Meanwhile, the US mirrors India's approach of minimal government ownership. The privatization of Air India is considered one of the Indian government's most successful divestments.