Civil aviation ministry recently announced that public sector oil company Indian Oil Corp (IOC) would sell jet fuel to government-owned carrier Air India at a discount of 8 per cent, a development that belies Aviation Minister Ajit Singh's claim that he can't think of particular airline while a taking policy decision.

IOC will charge the government-owned carrier a whopping Rs 5,300 lower per kilometer than the market rate.

The public sector oil company agreed to offer the discount following discussions between civil aviation and petroleum ministries.

The reported discount not only belies Ajit Singh's previous claims about creating a competitive environment in the civil aviation space, but also belies Minister of State for Petroleum & Natural Gas Panabaaka Lakshmi's March statement in which he had assured Parliament that the government wouldn't give any discount on fuel to Air India.

The discount on jet fuel is being seen as part of the government's alleged efforts to prevent the sector from becoming entirely competitive.

Analysts are of the view that such discounts for public sector companies discourage foreign investors from making huge investments in the sector. Criticizing the development, a Mumbai-based analyst said, "Asking refiners to extend discount to Air India actually explains why despite opening 49 percent FDI in aviation, not many are interested in coming."

Air India owes IOC Rs 2,545 crore, Bharat Petroleum Rs 779 crore and Hindustan Petroleum Rs 1,000 crore. What is more surprising is that the government-run airline doesn't provide any security as insurance cover against default.