Air India flight
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India's offer to sell a stake in Air India drew a huge blank. The bid failed to draw a single bid by the Thursday deadline, highlighting the Central Government's hurdles in fixing the debt-laden state carrier and meeting a broader target of stake sales in government-held firms.

The Ministry of Civil Aviation on Thursday, May 31, said that they had received no bids. Earlier on Wednesday, India's civil aviation secretary, R.N. Choubey had said that the government was unlikely to further extend the May 31 deadline.

The Modi government's plan to divest a 76 percent stake in Air India was announced in March. The sale would have helped ease the load of about $5.1 billion of its debt.

Selling the state carrier had been seen as key to Modi's plans to divest assets and help keep the fiscal deficit at 3.3 percent of GDP. The bid was especially crucial since the central government's goal to retain the fiscal deficit was already under pressure from giveaways to farmers and other welfare benefits ahead of a national election in 2019.

Earlier this month, the government had eased some terms and extended the period to make bids, but still found no takers for the airline. Air India flies some lucrative routes but also has one of the industry's highest employees-per-aircraft ratios.

Renu Kohli, a Delhi-based independent economist, while speaking to Reuters, said the government would now need to step up elsewhere to meet its divestment target.

"Relative to what we are seeing this year ... uncertainty in the financial markets, aggravated distress among banks and rising interest rates and oil prices, it does not seem like a very supportive time for people to come and buy such an asset," Kohli said, adding that Air India needed a large investment.