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The Ashok Hotel in Lutyens’ Delhi. Photo: Ramesh Pathania/Mint (Ramesh Pathania/Mint)
The Ashok Hotel in Lutyens’ Delhi. Photo: Ramesh Pathania/Mint (Ramesh Pathania/Mint)

Govt to lease out The Ashok Hotel, to keep Samrat Hotel due to security reasons

  • According to the plan, the land adjacent to the hotels will be allowed for commercial development such as building office complexes and service apartments as per the Delhi master plan rules and keeping in mind the security considerations

NEW DELHI: Government has decided to lease out the iconic The Ashok Hotel in Lutyens’ Delhi and the adjacent 22-acre land for developing a market complex and service apartments as part of its asset monetization plan to meet its disinvestment target for FY21.

However, The Samrat Hotel will continue to be run by India Tourism Development Corporation (ITDC) due to security reasons as it's close to the prime minister's residence.

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“An inter-ministerial group headed by DIPAM secretary has cleared the proposal last month. It will now go to the core group on disinvestment headed by Cabinet secretary and then needs to be cleared by the Cabinet Committee on Economic Affairs," a finance ministry official said under condition of anonymity.

The Department of Investment and Public Asset Management (DIPAM) earlier this year had commissioned a report from Feedback Infra for a feasibility study which had said that the government could garner around 7500 crore from asset monetization of the hotel properties. However, the official quoted above said government is not targeting any particular amount. “The report is based on assessment before outbreak of the covid-19. In current times, who can guarantee how much it will fetch," he added.

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 as per the Delhi master plan rules and keeping in mind the security considerations. 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 Bhubaneshwar. The hotel units of ITDC at Jammu and Bhubaneswar made losses of Rs28 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.

Government has set a disinvestment target of 2.1 trillion for FY21 including privatization of Air India and BPCL. Government missed the disinvestment target of 65,000 crore for FY20 by 14,701 crore. It has yet to carry out any disinvestment in FY21.

World Bank in its latest India Development Update released on Wednesday said given unprecedented financial market volatility after the outbreak of coronavirus pandemic, planned disinvestment is expected to proceed more slowly in the near-term. “As a result, the fiscal deficit and debt of the central government are likely to increase sharply over the next two years. In a baseline scenario, which takes into account revised growth projections, lower-than-expected divestment proceeds, and the fiscal measures adopted to date, the fiscal deficit of the central government is projected to increase to 6.6 percent of GDP in FY20/21 and remain at a high 5.5 percent in the following year," it added.

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