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Austerity directive: some power PSUs shift out of luxury mode

Austerity directive: some power PSUs shift out of luxury mode
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First Published: Fri, Aug 08 2008. 12 31 AM IST
Updated: Fri, Aug 08 2008. 12 31 AM IST
New Delhi: At least three public sector units, or PSUs, have stopped holding press conferences and other promotional events in luxury hotels following a government directive to cut down on such spending.
Officials at NTPC Ltd, Power Grid Corp. of India Ltd, or PGCIL, and Power Finance Corp. Ltd, or PFC, say they have started holding meetings either at their own offices, or conference halls at the government’s Press Information Bureau, or PIB, or facilities at the Standing Conference of Public Enterprises, or SCOPE, the apex body of central and state public enterprises.
While five-star hotels don’t charge for the venue, they earn on food and beverages, which on an average amounts to Rs1,500 per person, according to the PSUs.
The conference hall facilities at PIB in central Delhi and the SCOPE complex in south Delhi are available free of cost, and average food and beverage cost at these places is about Rs350 per person.
“We have stopped holding conferences in five-star hotels and have been asked to hold such conferences in government-owned facilities,” said a PGCIL executive on condition of anonymity. “Even our training programmes that were earlier held in five-stars are now being held at our own facilities.”
“We have not noticed usage of our Delhi property by PSUs since June,” said a spokesperson at Bharat Hotels Ltd, which owns the InterContinental The Grand hotel in New Delhi.
“We stopped holding events at five-star hotels as soon as we got the department of expenditure circular. We did not even celebrate our foundation day on 16 July, which is an annual gala event for our organization,” said a PFC executive, who declined to be named. “Even the state chief minister’s conference on ultra-mega power projects is being held at Vigyan Bhawan.”
Early in June, Prime Minister Manmohan Singh wrote to his cabinet colleagues urging austerity within the government. The finance ministry then directed other ministries to slash non-Plan expenditure by 10% and stop holding conferences at five-star hotels to save an estimated Rs6,000 crore in the fiscal year to March 2009.
The department of expenditure under the finance ministry issued a memorandum dated 5 June asking all government establishments to undertake “austerity measures”.
“In the context of the continuing rise in global crude oil and commodity prices, there is tremendous pressure on government’s resources. Hence, there is an urgent need for economy and rationalization of expenditure,” the expenditure department’s memo said.
“This will have some impact on the overall hotel industry,” said Sudeep Jain, executive vice-president and country head, Jones Lang LaSalle Hotels, an international property consultancy firm. “However, the magnitude of the impact will differ from hotel to hotel and will depend on how far the PSU business can be substituted with other businesses,”
“We have been asked to undertake a mandatory 10% cut in our non-Plan expenditure for heads such as overtime allowance, domestic and foreign travel expenses, publications, professional services, advertising and publicity and other administrative expenses,” said an NTPC executive, who did not wish to be identified.
However, not all PSUs have followed the government’s directive. India was represented at the five-day 19th World Petroleum Congress in Madrid, Spain, in June by as many as 77 executives from state-owned oil companies and seven officials from the ministry of petroleum and natural gas, including oil minister Murli Deora, as reported by Mint on 30 June.
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First Published: Fri, Aug 08 2008. 12 31 AM IST