The Centre has slashed the budgetary allocation for the Ministry of Tourism by 19% from Rs 2,500 crore in 2020-21 to Rs 2026.77 crore this year. The budget has allocated Rs 1088.03 crore for development of tourism infrastructure for FY 2021-22 compared to Rs 1655 crore last fiscal.
Meanwhile, the budget has raised the publicity fund from Rs 590 crores last fiscal to Rs 668.72 crore in FY 2021-22. Out of the ₹668.72 crore allocated towards promotion and publicity, ₹524.02 crore is for the overseas market and ₹144.70 crore has been kept for domestic tourists.
The industry was expecting a major push as the travel, tourism and hospitality industry is the most severely hit due to COVID-19. Many presentations and recommendations have been submitted to the Finance Ministry by industry association FAITH for the revival and survival of the tourism industry. However, the Budget 2021-22 did not concede any of the demand of the industry.
“Lack of immediate direct support in budget has disappointed the Indian travel and tourism industry,” Nakul Anand, Chairman, FAITH, commented. The tourism, travel & hospitality industry was looking at support for immediate and short-term measures for critical revival. This has not happened in the budget announcements. “While infrastructure measure announced as budget announcements, may boost tourism over long term, the opportunity for immediate support has regretfully been missed out,” Anand added.
FAITH said: “Not addressing any of these critical measures in the budget announcement has thrown the industry into a state of shock and deep dismay.”
The tourism, travel & hospitality industry is battling the worst in century crisis from the impact of COVID 19, revival from which will not be seen minimum for the next financial year till vaccination is fully undertaken with no observed side effects in all source and destination markets.
Subhash Goyal, Honorary General Secretary, FAITH and President, Confederation of Tourism Professionals, said that this was the great opportunity for the Government to revive the Tourism Industry and save at least 30-40 million jobs which are on the verge of extinction out of 75 million people who are directly and indirectly employed in this industry. “Not just Tourism, it is not mentioned of the services sector, which is a largest employment generator, in this Budget,” Goyal added.
“We expected much more than what was announced. However, we believe the Budget 2021 has focused more on spending to enable economic growth through infrastructure roads and financial remedies. Travel, tourism and hospitality was completely neglected,” Jyoti Mayal, President TAAI, commented.
Industry’s reaction:
Gurbaxish Singh Kohli, Vice President, Federation of Hotel and Restaurant Association of India (FHRAI)
“The Union Budget 2021 has disappointed the Hospitality industry. Hospitality and Tourism roughly account for 10 per cent of India’s GDP and employ nearly 9 per cent of India’s working population and yet, it failed to find space in the Union Budget. The Hospitality industry has been bleeding, and the FHRAI has brought it to Govt.’s notice through several representations time and again. Our pre-Budget memorandum to the Hon’ble Finance Minister included some priority reforms to stabilize the industry such as Review of the Kamath Committee recommendations, Classifying Hospitality under the RBI Infrastructure lending norm criteria, Industry status to hotels, restaurants and resorts across the country, To include Hospitality and Tourism in the concurrent list, MAT waiver for a period of three years, IGST billing to hotels for corporate and MICE bookings. The hospitality industry is disheartened and feels demotivated in its darkest hour. With zero foreign exchange earnings and less than 25 per cent of pre-pandemic revenues, the sector is facing an existential crisis. The industry is the fall guy for the Govt. We stand by and come through for the Govt. in its every need, as we did during this pandemic, but we are surprised that the sector could not find even a mention in the FM’s budget. We wish our Govt. would study what other countries have done to ensure tourism, the worst-hit sector, is kept alive. The Hospitality and Tourism industry was looking forward to some relief measures to lift this most severely affected industry by COVID19. Instead, it has yet again completely and fully chosen to ignore us.”
Ankur Bhatia, Executive Director, Bird Group
India’s vaccination program, which has garnered world-wide positive attention, may help in economic recovery as the situation of women and children is expected to improve with health programs resuming after vaccination of health workers and more people joining the workforce.
Finance Minister Nirmala Sitharam during her Budget 2021 speech on Monday announced that the government will provide ₹35,400 crore for Covid-19 vaccination in 2021-22. The funding would definitely be a shot in the arm for the ongoing vaccine drive.
The Indian economy is indeed awaiting a return to normalcy in sectors such as travel and aviation. These sectors which provide jobs to 10 percent of the population are the ones that are now carrying most of the Covid-19 burden and have yet to start operating at anywhere near pre Covid-19 levels. They are also the sectors responsible for enormous job losses and consumption declines. We expect a full throttle vaccination programme augmented by the Rs 34000 crore funding will bring the long-awaited cheer to the sector. People will start flying with confidence for leisure like during Pre Covid times after being significantly emboldened by innoculation against the virus.
Rohit Kapoor, Chief Executive Officer, OYO India & South Asia
“It is heartening to see a budget entirely focussed on revitalising the economy. On the backbone of the proposed reforms, we believe that a focus on growth-oriented measures, economic reforms and inclusive growth would pave the way for extensive economic recovery. The Government’s focus on extending and improving transport (road, railway, metro) infrastructure with nearly 217 projects worth over Rs 1 lakh crore to be completed under National Infrastructure Pipeline will enable travellers to explore hidden gems and therefore bolster the domestic tourism and hospitality industries. Additionally, keeping up with the changing times, an overall focus on technology with interventions like incentivising and promoting digital payments will fast track India’s transition into a digitally enabled economy.
We are confident that with the series of interventions announced by the Honorable Finance Minister, Nirmala Sitharaman, our country is on the path of stable and quick economic recovery. With the mantra of ‘Atmanirbhar Bharat’ and initiatives reducing compliances for one-person-companies, a boost for MSMEs, the reduction in corporate taxation along with the steps to simplify GST for companies further and ease tax compliance will boost morale across industries. The funds allocated to COVID-19 vaccines will also strengthen confidence among travellers and boost faster recovery in the service sectors. The Government’s efforts towards skilling the country’s youth and collaborating with other countries will spur entrepreneurship and enable job creation as well. This budget truly has the potential for transforming India.”
Shruti Shibulal, CEO & Director, Tamara Leisure Experiences
“Receiving ‘Industry’ status would be monumental for the hospitality sector and tourism in India. As one of India’s largest contributors to GDP, this merit would ensure focused long-term planning aligned with the nation’s goals for tourism growth and employment creation. In the long run, it would also serve to make these sectors, which are essential to our economic growth, more competitive amongst a global audience.
In the same vein, single-window clearance for all approvals would ease the process of establishing travel and hospitality ventures while incentivising more investments in the space.
On a consumer-level, as tourism begins to recover from severe pandemic related losses, it would be important to encourage foreign and domestic travel. One immediate way to facilitate this is by implementing an all-round GST reduction. For the financially cautious post-pandemic customer, the present GST rates of 12% – 18% could demotivate recreational travel.
For some years now, there has been discussion around creating a new category of short-stay visas for those who travel to India particularly for yoga, Ayurveda and wellness treatments. It is the ideal time to fast track this facility.
Wellness tourism is a fast-growing market which has been catalysed by a pandemic-fuelled focus on health and retreat. Kerala especially stands to benefit greatly if India is positioned among the world’s leading wellness travel hubs.
After safely lifting travel restrictions in tandem with vaccine distribution and other minor precautions, these initiatives must be taken up both immediately and holistically to bolster the nation’s hospitality and tourism sectors in the coming years.”
Sonica Malhotra Kandhari, Joint Managing Director, MBD Group
“Overall, the Budget 2021 is a pragmatic and positive budget which is committed to key sectors such as agriculture, healthcare and infrastructure development. Higher allocation of Rs 64,180 crore on healthcare which also includes Rs.35,000 crore for Covid-19 vaccines is committed to ensure fast rollout of mass vaccination and restoring normalcy. This is also expected to give much impetus to the travel & tourism industry in the coming year.
Moreover, the privatization of airlines, allocation of 1.10 lakh crore outlay for railways and boost to infrastructure development such as development of new highway projects is a welcome step that would lead the economy to the new growth trajectory. However, we were looking for some measures related to travel & hospitality sector such as awarding infrastructure status to the hospitality industry and to reduce GST rate on hospitality which have not been addressed in the budget. These reforms would have helped in the revival of this industry as it has been severely battered by the pandemic.”
Vineet Verma, Executive Director & CEO, Brigade Hospitality
“It is unfortunate that the Hospitality & Tourism sectors that have been the worst hit by the pandemic have found no mention in the current budget. It is important to extend some breathing space to the almost choked industry for it to even survive and before it finds its own way to get on to the path of recovery.”
Vishal Suri, Managing Director, SOTC Travel
“Union Budget 2021 focused on infrastructure, agriculture, healthcare, education and industrial sectors. While the Union Budget 2021 did not directly address several of the demands being made by the travel and tourism industry, it addressed a relatable need that acts as a medium for growth of the infrastructure sector. More economic corridors are being planned to boost road infrastructure with an allocation of 1.18 Lakh Crore. The government has set an ambitious target of building infrastructure in the country with special scheme to nudge states to spend more of their budget on infrastructure, providing Rs 1.10 Lakh Crore for railways, privatizing of airports and Indian railways national rail plan for India to prepare a future-ready railway system by 2030. These contribute towards sustainable growth within the tourism sector. With airports to be privatized in tier 2 and 3 cities, it will improve regional connectivity. Addressing concerns like immediate waiver/rationalisation of 5% TCS for outbound tourism, rationalisation of taxes will create the necessary boost for the tourism segment.”
Indiver Rastogi, President & Group Head – Global Business Travel – Thomas Cook (India)
“The Union Budget 2021-22 included 3 announcements covering the aviation sector with potential to deliver long term positive impact:
Privatisation of smaller airports in tier 2 & 3 cities under the asset monetisation program will serve to extend accessibility to regional circuits and India’s hidden gems, also increase affordability of air travel. This initiative will aid in the creation of a viable hub & spoke model to catalyse the government’s initiatives around Project UDAN and boost regional connectivity.
The spotlight on disinvestment is welcome – with the inclusion of Air India in the target set for FY22 and an overall target of Rs 1.75 lakh crore.
Benefits towards aircraft leasing was provided via a tax holiday on capital gains for a set up in GIFT City-Ahmedabad and tax exemption for aircraft lease rentals paid to foreign lessors.”
Sarbendra Sarkar, Founder & MD, Cygnett Hotels and Resorts
“While there is nothing specific on the tourism and hospitality sector in the budget, I feel broader focus on the budget on increasing consumption and infrastructure spend by the government will have a positive impact on the hospitality sector. The government has done the right thing by not introducing any new tax or COVID cess as some had anticipated. We also believe that the amount allocated for COVID vaccination is a positive for our sector as more people get vaccinated it will encourage people to travel.”
Aloke Bajpai, Co-founder & CEO, ixigo
“Tier 2 & 3 cities have seen a significant growth in demand for air travel and first-time flyers post relaxation of lockdown norms. Monetisation of airports in these areas will help capitalise this growing demand by accelerating infrastructure development in underserved areas and strengthening regional air connectivity. While these infrastructure measures will boost tourism in the long run, it’s sad to see that no extra spends or tax incentives were announced to provide immediate relief to the severely affected travel and tourism sector.”
Roop Partap Choudhary, MD, Noor Mahal
“Although the budget has not offered any major relief to the struggling travel and tourism industry, providing Rs 1.15 lk cr for Railways and privatizing airports, the government has given some aid to domestic tourism. A special impetus to local infrastructure development will definitely encourage domestic hospitality, travel and tourism. Development of road networks across the country gives regional and stand-alone players, at locations considered off the main grid, a fair chance to compete with the main-stream hospitality circuits. Other infrastructure developments in Tier II cities would assist the growth potential of regional hospitality players and possibly flip the whole scenario in near future.
The industry largely expected a more liberal and reasonable investment and loan framework from the union budget. A more flexible and tolerant financial environment could have supported small hospitality players to explore more growth avenues in these tough times. To encourage guest occupancy, boost domestic travel and help small/independent properties to be more competitive in the market, GST on room bookings should also be reduced from 18% to 10% as government efforts to support the industry on its path to recovery.”
Manish Rathi, CEO & co-founder, IntrCity RailYatri
“Finance Minister Nirmala Sitharaman needs to be complimented for the budget outlay and significantly enhanced focus on highways expansion and rail network this will boost intercity mobility in India. We welcome the finance minister’s new initiative to promote public bus transport services at a cost of 18,000 crores along with the deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses. Her National Rail Plan to create a ‘future-ready’ Railway system by 2030 is unprecedented.
100% electrification of broad-gauge routes by December 2023, indigenously developed automatic train protection system, eliminating train collision due to human error are some of the other outstanding examples of the FM’s vision to give shape to vibrant and truly Aatmanirbhar Bharat.
We congratulate her for presenting the first paperless budget and deserves full praise for outdoing her last two budgets – on 5 July 2019 and 1 February 2020 and that too in these difficult times.”
