The Narendra Modi government, in a major disinvestment push, is considering a complete exit from the India Tourism Development Corporation (ITDC) by selling 87% of its shares, ET Now reported quoting unidentified sources. However, the government will need an ‘in-principle’ nod from the Union Cabinet to go ahead with the plan.
Earlier in September, the Cabinet approved the transfer of Hotel Jaipur Ashok and Lalitha Mahal Palace Hotel, Mysore, to the governments of Rajasthan and Karnataka as part of its disinvestment exercise. It also cleared disinvestment of ITDC’s 51% equity in Donyi Polo Ashok, Itanagar, in favour of Arunachal Pradesh.
The government will likely sell 14 out of 16 loss-making hotels owned by state-run ITDC to private parties. The policy has been formulated in line with the view that running and managing hotels is not the job of the government or its entities.
India Tourism Development Corporation (ITDC) is a public sector undertaking that currently runs 16 hotels in Delhi, Patna, Jammu, Ranchi, Bhubaneswar, Puri, Bhopal, Bharatpur, Jaipur, Guwahati, Mysore, Puducherry and Itanagar.
Apart from ITDC, the government is also looking forward to major PSU disinvestment including Air India and Dredging Corporation. On Wednesday, the Cabinet allowed 49% Foreign Direct Investment in Air India. In November, the government had approved the sale of its entire stake in the Dredging Corporation of India Ltd (DCI) in a cabinet meeting. The government approved the sale of its entire 73.47% stake in DCI.
The government has undertaken the strategic sale of stakes in profitable PSUs to help boost up state revenue and bridge the fiscal deficit but has repeatedly fallen short of its disinvestment targets in the past. It has a target to earn Rs 56,500 crore by divesting its stake in public sector undertakings in the current financial year 2016-17, and has already garnered Rs 23,500 crore so far this fiscal through a share sale and share buyback by the companies.
The government is looking to raise close to Rs 9,000 crore by selling 10% equity stake each in the state-run companies Bharat Heavy Electricals Ltd and Oil India Ltd as part of its plan to raise funds from its equity stakes in 16 PSUs to meet its ambitious disinvestment target for the next financial year 2017-18.