Home Ministry Of Tourism Union Budget 21-22- A big dampener for the travel and tourism industry

Union Budget 21-22- A big dampener for the travel and tourism industry

The Government has been severely disappointing the travel and tourism fraternity in terms of support ever since COVID crippled the industry and the Union Budget seemed to be a ray of hope which has now been somewhat shattered.

Team TTJ

After being left out of the special economic and comprehensive package, the travel, tourism and hospitality sector were hoping that the government may consider the sector during the Budget 2021-2022.

Also, just a week before the budget, stakeholders and associations in the industry were banking that the Finance Ministry will come out with feasible plans to enhance and boost travel and tourism by ensuring adequate support in ease of doing business. Some associations also had sent suggestions for support and good governance before the budget.

Union Budget 21-22 has proven otherwise, with the budgetary allocation for the ministry of tourism slashed from Rs 2,500 crore in 2020-21 to Rs 2026.77 crore this year, which is a blow to the tourism industry which is reeling from huge losses due to the coronavirus crisis. The industry was clearly anticipating and expecting more than this.

With the coronavirus crisis bringing the tourism sector to its knees, the union budget has allocated Rs 1088.03 crore for the development of tourism infrastructure and has allocated a sum of Rs 63.65 crore for capacity building for service providers and Rs 138.65 crore for training and skill development.

With the coronavirus crisis restricting not just foreign tourist footfalls into the country but also keeping domestic tourists at bay, the budget has focused on pushing funds for promotion and publicity to help woo tourists back. Out of the Rs 668.72 crore allocated towards promotion and publicity, Rs 524.02 crore is for the overseas market and Rs 144.70 crore has been kept for domestic tourists.

The industry was expecting the government would have understood and studied the efforts of other countries that have put in to ensure their tourism sector survives these tough times. But that has not happened in India and has majorly left the sector disappointed.

Some of the industry views are:

Nakul Anand, Chairman, FAITH

FAITH the policy federation of all the national associations representing the complete tourism, travel and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) & cause partner AIRDA was looking forward to the Union budget FY 21-22 with great expectations. Lack of immediate direct support in the budget has disappointed the Indian travel and tourism industry. While infrastructure measures announced as budget announcements may boost tourism over the long term, the opportunity for immediate support has regretfully been missed out.

 Jyoti Mayal, President, TAAI

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. However, travel, tourism and hospitality were completely neglected. As we await the fine print, the direct taxes are not clear. Further, disinvestment in Air India is still on the rocks and is expected to be completed this year. Clarity on the same is eagerly is awaited by us, the main stakeholder partner hereto. For Rail packages over the years, this shall be an advantage since the plan is to create a ‘future-ready’ railway system by 2030. Passenger logistics shall have an advantage in the circuits and infrastructure.

Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) 

Against the challenging backdrop of the COVID era, the Union Budget 2021-22 is expansionist: 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. While the six pillars of the Budget presented a diversified approach to fundamentals, across health, capital, infrastructure, inclusive development, human capital and innovation, focus on the Travel and Tourism sector has been noticeably absent.

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. We welcome the focus on transportation infrastructure that forms a crucial base for Inbound & Domestic Tourism – with the announcement of a Rs. 1.18 lakh crore outlay for the Ministry of Road Transport and Highways (proposed 3500 km corridor in Tamil Nadu, 1,100 km in Kerala, 675 km in West Bengal and 1300 km in Assam in the coming 3 years); equally the proposal of a future-ready rail system by 2030 and the next phases of metro projects in key cities with the ‘Metro Lite’ and ‘Metro New’ concepts for tier 1 and 2 regions. From an aviation perspective, the announcement of airport privatisation in tier 2 and 3 cities/towns will serve as a boon towards access and affordability; the creation of a hub and spoke model will serve to catalyse the government’s initiatives around Project UDAN and Regional Connectivity.”

Aloke Bajpai, Co-founder & CEO, ixigo

Tier 2 and 3 cities have seen significant growth in demand for air travel and first-time flyers post relaxation of lockdown norms. The monetisation of airports in these areas will help capitalise on 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.

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 ‘Aatmanirbhar 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.

Ankur Bhatia, Executive Director, Bird Group

India’s vaccination program, which has garnered worldwide positive attention, may help in the 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 Sitharaman during her Budget 2021 speech on Monday announced that the government will provide Rs 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 per cent 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 inoculation against the virus.

Sonica Malhotra Kandhari, Joint Managing Director, MBD Group

Overall, 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 ensuring 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 the development of new highway projects is a welcome step that would lead the economy to a new growth trajectory. However, we were looking for some measures related to the travel & hospitality sector such as awarding infrastructure status to the hospitality industry and reducing the 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.

Sarbendra Sarkar, Founder & MD, Cygnett Hotels and Resorts

While there is nothing specific for 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.