The Hindu : Karnataka / Bangalore News : Hoteliers appeal to Governor for release of subsidy

Online edition of India's National Newspaper
Friday, Dec 21, 2007
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Karnataka

Karnataka - Bangalore

Hoteliers appeal to Governor for release of subsidy

Special Correspondent

BANGALORE: Hotel owners, who have been seeking subsidy for nearly a decade, have appealed to Governor Rameshwar Thakur to release the subsidy without further delay.

A delegation of hoteliers met the Governor and brought to his notice that successive Governments had failed to implement the tourism policy of 1997, with particular reference to the payment of subsidy to hotels. Under the tourism policy, hotels built in the tourism circuit in the State were eligible for a subsidy of Rs. 25 lakh.

The president of the Karnataka Pradesh Hotel and Restaurants’ Association, Inna Srinivas Rao, told The Hindu that 181 hoteliers and restaurant owners had taken advantage of the State tourism policy of 1997, which had promised to pay subsidy to hotels constructed at remote places in pre-determined locations by the Tourism Department. These places were spread out in 22 districts — Hassan, Chikmagalur, Udupi, Belgaum, Dakshina Kannada, Tumkur, Gulburga, Uttara Kannada, Shimoga, Haveri, Kolar, Chamarajanagar, Bijapur, Mandya, Kodagu, Chitradurga, Bellary, Koppala, Gadag, Davanagere, Mysore and Dharwad.

Loss-making units

Mr. Rao said the hotel owners, believing that they would be paid the subsidy, had borrowed heavily from various banks. Their establishments were located away from the cities where the patronage was not very encouraging. As a result, the owners were experiencing losses; some of them had invested nearly Rs. 2 crore and had not earned adequate returns. They were even unable to pay their dues to the bank. In the northern districts, several hotels had already closed down and banks had attached the property.

According to the tourism policy of 1997, if an entrepreneur built a hotel at a cost of Rs. 1 crore, he would get Rs. 25 lakh as subsidy; woman entrepreneurs would get one per cent more.

Loan problems

Former president of the association Ramanath Bhat said on two occasions the hoteliers had appealed to the Government about the subsidy component and there had been no action. There were hoteliers who had even borrowed from private money lenders in the belief that they would get the subsidy. Such loans were taken at exorbitant rates of interest and many of the entrepreneurs and money lenders were locked in a legal battle over the property.

The hoteliers have also secured a court direction to the Government stating that the subsidy should be paid to the hoteliers based on the seniority of their investment. According to sources in the Tourism Department, the department has already noted the court direction and taken necessary steps to earmark Rs. 20 crore out of a total of Rs. 450 crore subsidy payable to various industries.

But the sources pointed out that after 1997, there were two versions of the tourism policy passed by the successive State Governments. They said that though Budget 2007-08 has earmarked Rs. 148 crore for tourism development there was no mention on the payment of the long-due subsidy.

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