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Air travel to pinch pockets, AI to get Rs 2,500 crore

First and business class air travellers would find flying costlier from the next fiscal with an almost 2 per cent hike in service tax rate proposed in the general budget, which also earmarked Rs 2,500 crore for ailing Air India in 2015-16.

Union finance minister Arun Jaitley on Saturday announced hike in service tax from 12.36 per cent to 14 per cent for travel by air in first and business class in the Budget, making it costlier.

The total plan allocation for the Civil Aviation Ministry stands at Rs 5,360.95 crore and its non-plan expenditure estimated at Rs 621.50 crore.  Air India has been allocated Rs 2,500 crore as equity infusion during the year.

Saddled with a massive Rs 40,000 crore debt and combined losses of Rs 36,000 crore till last fiscal, the airline is surviving on a government bailout package, announced earlier.
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