Battered tourism sector gets Rs 2400 crore; more could have been done, says industry
From the budgetary allocation for major tourism infrastructure schemes, Rs 1181.30 crore is earmarked for the Swadesh Darshan Scheme, and Rs 235 crore for the PRASHAD Scheme.
The Ministry of Tourism has been allocated Rs 2,400 crore in the Union Budget which is 18.42 per cent higher than the allocation for the financial year 2021-22, bringing some relief to a sector ravaged by the Covid pandemic.
India’s hotels, travel operators and players in the hospitality sector get a special mention in Finance Minister Nirmala Sithraram’s budget speech as part of the emergency credit scheme, which has been expanded by ₹50,000 crore to total cover of ₹5 lakh crore.
She mentioned that the additional loans will go to the sector.
Of the proposed budget allocation of Rs 2,400 crore, a major portion of the outlay amounting to Rs 1,644 crore is earmarked for the development of infrastructure for tourism and Rs 421.50 crore is meant for promotion and publicity activities.
From the budgetary allocation for major tourism infrastructure schemes, Rs 1181.30 crore is earmarked for the Swadesh Darshan Scheme, and Rs 235 crore for the Pilgrimage Rejuvenation and Spiritual and Heritage Augmentation Drive (PRASHAD) Scheme.
Rs 130 crore is set apart for the development of iconic sites and the remaining would be used for funding other schemes like capacity building for service providers, Champion Service Sector Scheme, Information Technology and also to meet the establishment expenditure of the Ministry and its subordinate office, the India Tourism Offices, in the country and abroad.
Sitharaman said in difficult hilly areas National Ropeways Development Programme will be taken up on PPP mode and may also cover congested urban areas, where a conventional mass transit system is not feasible.
Contracts for eight ropeway projects for a length of 60 km will be awarded in 2022-23, she said.
An allocation of Rs 227 crore has been earmarked for the northeastern States for the year 2022-23. Rs 98 crore has been allocated under the Tribal Sub Plan for the creation of tourism infrastructure in the tribal areas.
The Loan Guarantee Scheme for Covid-affected Tourism Service Sector (LGSCATSS) has been started during the current financial year.
“The ECLGS [Emergency Credit Line Guarantee Scheme] will be extended up to March 2023 and its guarantee cover will be expanded by ₹50,000 crore to total cover of ₹5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises,” Sitharaman said.
ECLGS was a part of ₹20 lakh crore comprehensive package announced by the finance minister on May 13, 2020. The aim of this package is to aid micro, small and medium enterprises (MSMEs) to overcome the distress of the pandemic.
Hospitality is one of the segments that still haven’t recovered from the pandemic. The wave of Omicron infections stopped people from travelling again, stalling a nascent recovery in the sector.
“The prolonged effect of COVID-19 pandemic on the overall hospitality sector has created a burden on small to medium scale players to service their debt obligations… We feel, in the 2022-23 budget, the GoI [government of India] shall create provisions to create liquidity for the travel & tourism industry, provide directions to the central bank to roll out low interest working capital loan schemes and expedite the paperwork process,” Pranav Dangi, founder of hospitality startup Hosteller, had previously said.
“The ECLGS extension up to March 2023 and the increased cover of Rs. 50,000 crores to a total cover of ₹5,00,000 crore is a welcome move to empower our hospitality industry which has been struggling to cope with the COVID induced challenges,” Ajit Shah, Partner at White Panda Hospitality (parent entity of restaurants Tera Vita, Kiko-Bā and Dadel), said.
However, some feel that it may be too little to bring any major relief to the Covid-hit sector.
Gurbaxish Singh Kohli, Vice President, Federation of Hotel & Restaurant Associations of India (FHRAI), said that the extension of the ECLGS scheme is just a drop in the ocean for a sector that has been severely battered. Given the massive damages that decimated the entire sector’s ecosystem, these measures are not adequate to bridge the losses and offer impetus to the hospitality and tourism industry, he said.
“The number of meetings we held with the Finance Ministry and other ministries led us to believe that they were surely going to announce some sort of specific relief for the industry but it is a huge disappointment that it has not come through,” added Kohli.
The Indian hotel industry alone has taken a hit of over Rs 1.30 lakh crore in revenue for the fiscal year 2020-21 due to the impact of the COVID-19 pandemic, the FHRAI had said last year. Early this fiscal, the industry faced another blow with the delta wave and since late December the industry is facing low demand due to the omicron variant.
FAITH, (Federation of Associations in Indian Tourism & Hospitality) the policy federation of all the national associations representing the complete tourism, travel and hospitality industry of India has said that more direct and immediate support could have been extended.
“The Union Budget provides some relief and medium to long term infrastructure measures to stressed tourism travel & hospitality industry, but there was an immediate opportunity for more direct intervention to support the highly stressed tourism travel and hospitality companies and their employees,” said Nakul Anand, Chairman, FAITH.
According to FAITH, additional support measures could have come through measures such as abolishment of TCS on outbound travel to prevent travel expenditure shifting from Indian travel companies to offshore travel companies, infrastructure status to hotels irrespective of their location or capital size to support capex growth and e-visa fee waiver for all tourist visas for 2022 and beyond to support inbound revival.
KB Kachru, VP, Hotel Association of India (HAI) and chairman emeritus and principal advisor, South Asia at Radisson Hotel Group, said the announcement recognises the distress in hospitality, but the specifics need to be studied to better understand the impact on specific businesses and organisations. HAI has been requesting that the scheme be customised and tailored to suit the unique hotel business model and future outlook for the sector.
The Indian Association of Tour Operators (IATO) said that none of its requests were considered in the budget.
Rajiv Mehra, President IATO, said, “We had requested one-time grant based on our 2019-20 turnover, reduction in GST, restoration and enhancement of SEIS benefit, reducing taxes on international airfares and overall reduction of taxes on the hospitality sector. Most disappointingly none of these found mention in the budget presented.” Mehra adds, “There has been huge employment loss besides financial loss in our sector. Just a few years ago, we were earning huge foreign exchange for the government and in this hour of despair we expected some hand holding by it.”
Mandeep Lamba, president, South Asia, at HVS Anarock said the ECLGS announcement was a welcome move but said that the industry again will have to defend itself. “A greater focus on infrastructure investments, notably road development and ropeways that will enhance connectivity in hilly areas would help the tourism sector make some strides. However, the hospitality sector, which was one of the hardest impacted by Covid, a fact well acknowledged by the government repeatedly, has once again been left to fend for itself,” he said.
You must be logged in to post a comment.