India’s Tourism Industry: ‘In a State of Shock & Disbelief’

Finance Minister Nirmala Sitharaman on Sunday made her fifth and final set of announcements as part 20 lakhs crore Aatma Nirbhar Bharat economic package announced earlier by PM Narendra Modi in an address to the nation to revive the economy and save millions of livelihood badly affected by the Corona pandemic and the resultant lockdown.

As the finance minister completed her series of announcements under Aatma Nirbhar Bharat package, which includes some bold economic reform measures, comprehensive financial support to different sectors of the economy and relief for labourers and weaker section of the society, India’s Travel & Tourism industry is feeling neglected and shocked. In her five sets of announcements, the FM offered no solace or succour to this sector devastated by the corona inflicted catastrophe.

Considering the significant contribution of this sector to the economy in terms of employment and income generation, and millions of jobs being at risk, the industry was hoping for a relief package for itself. FAITH, the umbrella body of all associations in the Indian travel and hospitality sector, had made detailed representations to the government, seeking a relief package for the sector, but it seems that the federation’s all fervent requests to the government have fallen on deaf ears. By not offering any relief to this sector, the Modi Government has also failed to live up to its stated commitment to tourism. On Saturday, the FM had announced some police reforms for the civil aviation sector, but that in no way can be regarded as relieves for airlines and airports.

Takeaways from the FM’s five sets of announcements:

  •  No announcements to support tourism
  • 10 Weeks of constant discussions with representatives of the sector failed to impress the government, the finance minister
  • The industry has gone directionless

FAITH, the federation of all the national associations representing the complete tourism, travel and hospitality industry of India, says the Indian tourism industry has gone into a state of disbelief and shock. The Indian Tourism industry was looking forward to receiving a deep set of survival measures for tourism from the ₹ 20 lakh crore package announced over 5 days, which however were not addressed.

The Indian Tourism, Travel & hospitality is believed to impact almost 10% of GDP through its direct and indirect impact. It has already seen over one-quarter of accumulated losses which began from February onwards. There is no cash inflow expected for many quarters over FY 20-21 as the key segments of the Indian tourism economy will be down. The international inbound tourists, inbound and VFR – (visiting friends and relatives) and the outbound travel will remain mostly non performing due to international flight restrictions & tragic impact in most key markets tourism markets of India. Domestic travel and corporate travel within the country may slightly ease up post lockdown but will be highly restricted due to fear of travel among elders & children, the new social distancing norms, corporate travel freeze and the closure of the holiday season which will be impacting all leisure, adventure, heritage, spiritual, cruise and niche tourism segments. The meetings incentives exhibitions & events segment will be severely impacted due to meeting size restrictions. Consequently, all tourism service providers, the hotels, travel agents, tour operators tourist transporters, restaurants, guides will be compromised and the tourism industry of India will be operating with extreme under capacities making most tourism businesses unviable on a cash operating basis. To prevent this and to ensure survival, FAITH had proposed a dedicated interest and collateral-free long term fund for paying salaries & operating costs and for a minimum of 12 months of complete waiver of fixed central & state statutory and banking liabilities without any penal or compounding interest which have not been addressed. The proposed MSME fund with its many underlying restrictions may have very limited usage. FAITH & its ten member associations (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) had been constantly dialoguing with all factions of the Government over the past 10 weeks the PMO, ministries of Finance, commerce, aviation, and tourism, with RBI, with all 28 chief ministers, Niti Aayog and with the Empowered Group 6. Indian tourism travel and hospitality is said to impact 10-12% of India’s employment which is believed to cover almost 5 crores + direct and indirect jobs. The industry has gone numb from a lack of any umbrella direction from the Government or without any fiscal & monetary support. With no visibility of cash inflows, the Indian tourism industry is now looking at large scale bankruptcies, business closures which will lead to job losses across cities, towns and hinterlands of India. This has the potential to set back the Indian tourism, travel and hospitality industry by many years.

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