January 30, 2023 TnH Global

Budget 2023-24: Most have given up expectations; a few others are still hopeful

We are bringing here five expectations of the travel & tourism industry from the Union Budget 2023-24. As many of the industry feel disillusioned with the whole budgetary process due to the perpetual neglect of the sector in Union budgets year after year, they have no expectations from this year’s budget, it would also be interesting to know why they have become so despondent.

It has been a tradition that every year before the presentation of the Union budget, different sections of society and the economy express their expectation or wish-list from the upcoming budget and the finance minister does take note of such expectations. India’s travel & tourism industry has also been expressing enthusiastically their budget expectations every year in the run-up to the budget presentation. But this year most of them are unmoved. Many in the industry are candidly saying that they have no expectations from this year’s budget. Among people who said that they have no expectation from the budget are some of the leading lights of the industry such as Ajay Prakash, President of TAFI, Sarabjit Singh Singh, former senior vice president of IATO, and Rajeev Kohli, former vice president of IATO. Singh and Kohli are also among the country’s leading inbound tour operators.

Expressing his displeasure over the neglect of the tourism industry in every Union budget, Prakash said that every year before the budget presentation the industry put forth its viewpoints and expectation to the finance minister in anticipation that the FM would announce something for the tourism sector in the budget, but the industry does not even get mentioned in the budget speech. “Therefore, it does not make any sense to have any expectation from this year’s budget,” said Prakash.

Echoing similar sentiment, Sarabjit Singh, Managing Director of Travelite (India) said that he has no expectations at all from the budget; there is no reason to have any expectations when tourism is not a priority for the government when it did nothing for the sector in the last seven years. “Year after year, the industry has been asking the government to announce some positive measures for the sector in the budget, but our cry for help has constantly been ignored. We don’t think this year’s budget will be different, so we have no expectation from the budget,” Singh stated. He rues that when the government did not offer any support to the industry even during the pandemic crisis, what can make me expect something positive from the next budget?

It is pertinent to note that India’s travel and tourism industry has been one of the worst-hit victims of the Covid-19 pandemic. The industry feels that during the pandemic when the government announced Atmanirbhar Bharat Packages, no support was offered to the tourism sector.

Disapproving the excessive GST rates levied on the travel and tourism sector, Singh sarcastically said why not the government further increases taxes on the industry to increase its tax collections.

Speaking on similar lines, Rajeev Kohli, Joint Managing Director of Creative travel, categorically said that he too has no expectations from the upcoming budget. “I am least concerned about the budget presentation, and have no expectation from it,” said Kohli, adding that he will be pleasantly surprised if something good come out from the budget, considering how the consecutive budgets had ignored the industry’s concerns and expectations.

There is a widespread sentiment in the industry that the government does not care for the tourism sector despite its huge potential. “The industry has so much potential for the country, for its socio-economic progress, unfortunately, it still continues to be neglected except in speeches,” said Prakash. He said that Prime Minister Narendra Modi has time and again stated how important tourism is and how much the country can benefit from it, but the problem exists at the level of the tourism ministry. Prakash suggested that if the government is indeed serious about the tourism sector, the first thing the Prime Minister should do is to appoint a strong and experienced person as the tourism minister who has direct access to the Prime Minister Office (PMO).

While lauding the PM’s strong vision for the sector, Sarabjit Singh said that unfortunately, no one under him is paying any attention to the issues and concerns of the industry. Kohli too feels that while the PM has a positive intent for the sector, his subordinates including ministers and bureaucrats are doing nothing for it.

Obviously, there is a deep sense of despair in the country’s travel & tourism industry due to the government continued apathy towards the industry. Discontent is so strong that many in the industry have just stopped having any expectations from its budget.

However, there’re still some hard-core optimists in the industry who have not given up their hopes and expectations. As ever, they are hopeful of the forthcoming budget and happy to share their expectations. Trade bodies have also done what they are expected to do dutifully: submitting their expectations to the Finance Ministry.

Unarguably, there are so many reasons for the Government to give the tourism sector due importance in its policy formulations and budget announcement. “There is no other industry that can bring about the kind of socio-economic prosperity as much as the tourism industry. It’s very important that this industry should be looked at for its potential to contribute to India’s socio-economic development,” said Arvind Singh, CMD of Royals Club International. According to Singh, the tourism sector’s share in global GDP and employment will continue to rise. “Its share in the world GDP, according to WTTC, will grow from just over 10% in 2019 to 11.30% by 2032. Its growth is predicted to be twice (5.8% for the 2022-32 period) than that of the overall global economy (2.7% for the 2022-32 period). And most importantly, one in three new future jobs will come from the sector,” Singh noted. Vouching for the immense growth potential of the sector, he hopes that the forthcoming Union budget will fulfil some of the long-pending and much-needed demands of the industry.

Here we bring the industry’s five expectations from the next budget to be presented on 1^st February 2023:

Infrastructure status: Infrastructure status has been the long-standing demand of the industry, which is reiterated every year before the budget presentation. This year too, in their wish lists presented before the FM, associations like FAITH and FHRAI have sought infrastructure status for the industry. In a pre-budget meeting with the FM, FHRAI asked her for granting the infrastructure status to the hotel industry. Currently, hotels built with an investment of Rs.200 Crore or more have been accorded infrastructure status. But the association feels that is not enough. FHRAI expects the finance minister to bring this threshold down to Rs.10. Cr to give a fillip to budget segment hotels. This will enable hotels to avail of term loans at lower rates of interest and also benefit from longer repayment periods. “Infrastructure status for the industry is one of the longest and most important demands that the Government should look at to give the much-needed fillip to the development of infrastructure,” said Arvind Singh of Royals Club International.
Rationalisation of GST rates: Associations like IATO, FHRAI and others want a reduction in GST rates applicable to the travel & hospitality industry. FHRAI has requested the finance minister to levy a uniform GST rate of 12% across all hotel categories and room tariffs. According to Arvind Singh, the Government must look at rationalization of GST rates for hotels at 7-8 % across the board. Currently, GST rates applicable to hotels and restaurants range from 12 to 18%.
Extension of EPCG & ECLG Scheme: In view of the volatile economic environment for the industry, FHRAI has requested the Government to continue the current benefits for the hospitality industry under the EPCG scheme for another 10 years. It has also asked for an extension of the ECLG scheme for a maximum period. FHRAI has demanded that under ECLGS, the repayment period should be either enhanced to 10 years or as per the loan repayment period of the principal loan, whichever is longer.
Waiving visa fees for tourists: In June 2021, India announced that the country would offer a fee waiver to the first 5 lakh international tourists applying for Indian visas. However, few tourists benefited from the scheme that was in force till March 31, 2022, due to delays in reopening borders, the resumption of scheduled international flights and other reasons. Arun Anand, Managing Director of Mid-Town Travels, says the Government should again announce a similar scheme to attract foreign tourists. “In the forthcoming budget, the finance minister should announce that foreign tourists coming to India between April 1, 2023, and December 2023 will not have to pay any visa fee. This will give a strong message to the world that India is serious about attracting tourists,” said Anand.
Swadesh Darshan scheme as a ‘flagship’ destination programme: The Union Budget 2023 must look at developing the Swadesh Darshan Scheme into India’s ‘flagship’ destination development programme, according to Arvind Singh. “The government must target holistic development of 1,000 tourism sites and attractions every year, for the next ten years, with an annual budget outlay of at least 15,000 – 20,000 crore,” Singh said. If scaled and expanded, the SD scheme is very promising and transformative, but barely in its current avatar. “We need state-of-the-art, well-developed and amenities-equipped destinations. We do not have that and nor should we lay such claims,” said Arvind Singh, adding that India is home to tens of thousands of big and small sites and attractions, and many of them are being forever lost to mismanagement, encroachment and loot.