The Disinvestment Commission has clarified that it had never recommended any divestment in the India Tourism Development Corporation (ITDC).
There was some confusion following a statement in the commissions recommendation which said since ITDC was a non-core public sector enterprise, government can divest up to 74 per cent of its stake in the company.
The tourism ministry is set to appoint domestic financial institutions like SBI Caps and IDBI to help interpret the recommendations of the commission and to advise it on the appointment of a suitable international financial advisor to decide the modalities of disinvestment, according to ministry sources.
Tourism secretary MP Bezbaruah said: There may be some confusion over the quantum of disinvestment to be made in ITDC or whether at all anything has to be done. Though not binding, the government will rely on the financial advisors advise .
Subsequently, the ministry was exploring the option of divesting government stake in the corporation up to 49 per cent while retaining a majority government equity.
This move has been staunchly opposed by the labour unions which expressed fears that prime and valuable government property would pass into private hands at very cheap rates.
However, GV Ramakrishna, disinvestment commission chairman clarified that the recommendations were not for disinvesting in ITDC, but for ITDC to withdraw from direct hotel operations by handing over prime hotel properties to private hotel chains on long-term lease-cum-management contracts.
This would imply that the government would continue to retain 100 per cent control of ITDC as well as ownership of all prime hotel properties, while earning revenues through management contract fees.
Ramakrishna said the commission had recommended that ITDC get out of operation of non-prime location hotels by hiving these off as separate companies and subsequently divesting government stake up to 100 per cent.
The disinvestment commission, in its fifth report, has recommendations for two ITDC subsidiaries Ranchi Ashok Bihar Hotel Corporation and Utkal Ashok Hotel Corporation Ltd. There is a distinction between hotel activity being a core economic business for a PSU and tourism activity being a core activity for the government, said a member of the disinvestment commission.
Under this, while it was felt that ITDC should not be directly in the hotel business, it was also clarified that it should continue to be involved with development of tourism infrastructure in the country as this was the onus of the government. Hence, we recommended that the government should continue to retain 100 per cent ownership of ITDC, he added.
However, the recommendation that ITDC withdraw completely from the hotel operations is yet to find favour with ITDC management. The resistance owes to the fact that if ITDC withdraws from the management of properties and hands over this to the private sector, as has been suggested by the disinvestment commission, it would mean a loss of power for ITDC officials.
