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Defunct hotels: CAG needs to go beyond nit-picking

BY TAVLEEN SINGH

It is with breathless disbelief that I have watched media reactions to the latest brouhaha over Arun Shourie and privatisation.

Any hack with a glimmer of familiarity with Delhi’s corridors of power knows that if there is one person in those murky corridors who is definitely not corrupt it is Shourie yet we have swallowed unquestioningly the nonsense being fed us by the Finance Minister and the Comptroller & Auditor General (CAG) about ‘irregularities’ and ‘active interest’ in the sale of a couple of defunct government hotels that would have probably closed down by now if they had not been sold.

By doing this we have misled the public and ended up inadvertently supporting the Sonia-Manmohan government’s unforgivable decision not to continue privatisation despite the public sector having drained us of thousands and thousands of crore rupees that could have been better spent.

Drain on exchequer

The facts. The India Tourism Development Corporation has, for several decades, been allowed to run hotels that have been a serious drain on the exchequer but have not been sold because they have been used as guest houses and watering holes by ministers, MPs and bureaucrats.

Some of them, like the Akbar Hotel in Delhi, became so run down on account of disuse by normal hotel guests that they were converted into government offices.

Others like Delhi’s Centaur Hotel have reached such depths of decay that the occupancy rate is 2% and nobody wants to buy it.

Please remember that there is a desperate shortage of hotel rooms in our major cities but despite this nobody wants to stay in government hotels because they are so bad.

Centaur hotels

It was against this background that Shourie as Disinvestment Minister in the last government decided to sell the two Centaur hotels in Mumbai. Independent assessors were brought in to value the hotels and in the case of the Juhu Centaur a reserve price of Rs 1 crore and 60 lakhs was decided. When bids were opened in September 2001 it was found that there was only one bidder. A company called Tulip, headed by Ajit Kerkar, former boss of the Taj group of hotels.

Tulip bid Rs 153 crores for the hotel and since it was the only bidder and its offer was considerably more than the reserve price the hotel was sold.

When Kerkar could not come up with the deposit of Rs 5 crores in the first month he was told he would forfeit the money.

He pleaded for a bit more time and offered to raise the deposit to Rs 15 crores.

When his guarantee was found to be defective the deal was nearly cancelled until he brought letters from the Indian banks who were backing him.

Unsatisfied even with this assurance Shourie demanded that the heads of the banks meet him in person. Only then was the hotel sold.

After this what happens is surely not the business of government any more but Shourie has been questioned by TV anchors endlessly over why he did not realise that the hotel could be sold for more.

And, from the ever vocal communist leader, Gurudas Dasgupta we hear that those who ‘squandered government money should be nailed’.

Leftist angle

Personally, I like this idea very much but can we begin with Marxists and lefties like Dasgupta who have forced us to ‘squander’ hundreds of thousands of crores trying to revive government companies that account for only a few thousand government jobs.

Shourie calculates that in the past four years revival packages accounted for Rs 45,000 crores.

Count from Independence and we come up with vast amounts of taxpayers’ money that has gone down the drain.

Privatisation, or disinvestment to use the Indian euphemism, is not an option it is a necessity.

We cannot afford to spend money on a public sector that gives us less than 1% returns on our money. One of the people who agreed with this was P Chidambaram.

When he was Finance Minister under Deve Gowda I remember well an interview I did with him in which he explained that the public sector in Nehruvian dreamtime had been planned as something that would give the government the financial strength to invest in hospitals, roads, power plants, schools.

He admitted, although he is unlikely to admit it now, that the idea had failed.

Ironically, the Marxists who are the Sonia-Manmohan government’s life support also know that privatisation is the only way to save the money we desperately need for other things.

Secret wish

They approve of privatisation in West Bengal and China but object to it in Delhi because, in the humble view of your ever humble columnist, they secretly want all ‘bourgeois’ governments to fail.

Only if this happens do they think they have a chance of ruling India.

Frankly, what is a huge disappointment is the CAG report’s comments on the sale of the Centaur Hotels. It shows a frightening lack of comprehension and the worrying thing is that if there is incomprehension in something as simple as the sale of a couple of hotels how much more incomprehension there must be when it comes to complicated defence deals.

Constitutional right

At a time when the credentials of constitutional institutions like the Election Commission are being questioned by cabinet ministers I do not want to add my voice to the chorus but it is hard not to point out that the CAG needs to do a little more homework and tell us how much money we have wasted in the past fifty years on the public sector.

It would be more useful than nit-picking over a few small deals.