After being left out of the special economic and comprehensive package, the tourism and hospitality sector were hoping that the government may consider the sector during the Budget 2021-2022. But that has not happened which has left the sector disappointed.
Federation of Hotel and Restaurant Association of India (FHRAI) stated the Union Budget 2021 has disappointed the hospitality industry.
“Against the challenging backdrop of the COVID era, the Union Budget 2021-22 is an expansionist budget: We welcome the much needed investments in healthcare, focus on capital expenditure, prioritisation of assets, privatisation and no change in taxation – structured around a clear pivot to inspire economic growth,” Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) Ltd said. “While the six pillars of the Budget presented a diversified approach to fundamentals, across health, capital, infra, inclusive development, human capital and innovation, focus on the Travel and Tourism sector has been noticeably absent.”
Menon added, for an industry that is a crucial contributor to India’s GDP and a powerful force multiplier, priority tourism-related announcements – an imperative to revival and sustenance — were clearly missed. “We are looking at a long road to recovery and the Union Budget has not provided the helping hand that was expected of it.”
According to CMIE data, during the June quarter (lockdown period), the travel and tourism sector witnessed a drop in employment by 5.5 million. At the same time, the sector had employed 20.7 million people in the December 2020 quarter. This shows the employment of the sector. After 2018, tourism and travel was among the few sectors that grew faster compared to other sectors. Thus, helping the economy.
The industry was hoping for some budget announcements from the government. FHRAI in its pre-budget memorandum to the Finance Minister included some priority reforms to stabilise 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,” said Gurbaxish Singh Kohli, Vice President, Federation of Hotel and Restaurant Association of India (FHRAI).
“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,” stated Kohli. “We stand by and come through for the Government 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.“ During the pandemic, many hostels were turned into quarantine centres at the time of crisis.
The industry was expecting the government would study what other countries have done to ensure tourism sector survives these tough times.
Meanwhile, Vishal Suri, Managing Director of SOTC Travel stated, “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.” He emphasised that if concerns like immediate waiver/rationalisation of 5 per cent TCS for outbound tourism, rationalisation of taxes were addressed the tourism segment will witness a boost.
Anirban Chakraborty, Managing Director and CEO, Tourism Finance Corporation of India has a different perspective on the budget not mentioning tourism sector. He said the faster rollout of mass vaccination and restoring normalcy sooner than expected will give a much-needed boost to the travel and tourism demand in the coming year.