BackDelhi’s iconic Ashok Hotel to host a market complex soon
The finance ministry will seek cabinet nod to lease out the hotel as part of its asset monetization plan
PremiumThe finance ministry will soon move a cabinet note to lease out the The Ashok Hotel in Lutyens’ Delhi, after the proposal was cleared by the core group on disinvestment headed by the Cabinet secretary Rajiv Gauba last month.
“The core group of disinvestment has cleared the proposal. After completing the inter-ministerial consultation, we will soon move a Cabinet note seeking clearance from the Cabinet Committee on Economic Affairs (CCEA) chaired by prime minister Narendra Modi," a finance ministry official said under the condition of anonymity.
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The government plans to lease out the iconic hotel and the adjacent 22 acres to develop a market complex and service apartments as part of its asset monetization plan to meet its disinvestment target for FY21.
However, The Samrat Hotel, also in Delhi, will continue to be run by India Tourism Development Corp. (ITDC) due to security reasons as it’s close to the prime minister’s residence. An inter-ministerial group headed by the Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey had cleared this proposal in July.
Earlier this year, DIPAM had commissioned a report from Feedback Infra for a feasibility study, which had said that the government could garner around ₹7,500 crore from asset monetization of the hotel properties. However, Mint reported on 20 August quoting finance ministry officials that the government is not targeting any particular amount.
“The report is based on assessment before the outbreak of covid-19. In current times, who can guarantee how much it will fetch," the finance ministry official had said.
According to the plan cleared by the inter-ministerial group, the land adjacent to the hotels will be allowed for commercial development such as building office complexes and service apartments, keeping security considerations in mind.
The proximity of the hotel properties to the prime minister’s residence makes the land highly sensitive.
ITDC has closed down most of its loss-making hotels in various states and its balance sheet is now much cleaner, the official said. It recently shut down Hotel Janpath in New Delhi. Currently, it runs The Ashok Hotel and The Samrat Hotel in New Delhi, Hotel Jammu Ashok in Jammu and Hotel Kalinga Ashok at Bhubaneswar.
The hotel units of ITDC at Jammu and Bhubaneswar made losses of ₹28 crore and ₹12.2 crore respectively in FY19.
“Some of the reasons for incurring losses include, inter-alia, the wage structure of ITDC employees which are higher than industry norms, non-refurbishment and renovation due to ongoing disinvestment process and competition from other modern hotels," tourism minister Prahlad Singh Patel said in February this year replying a question in Lok Sabha.
The government has set a disinvestment target of ₹2.1 trillion for FY21, including the privatization of Air India and BPCL. So far this year, government has garnered ₹12,225 crore through minority stake sales and the initial public offering of Mazagon Dock Shipbuilders Ltd.
It is, however, yet to carry out any strategic disinvestments this fiscal year. While the finance ministry had missed the disinvestment target of ₹65,000 crore for FY20 by ₹14,701 crore, it is likely to miss the target again due to the pandemic-induced economic downturn.
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