March , 2021
Did the budget overlook the tourism sector
15:31 pm

Kuntala Sarkar


The pandemic has impacted the economy hugely. The tourism sector has been one of the worst hit in the global context. According to the United Nations World Tourism Organisation (UNTWO), the approximate loss in the tourism sector in the international market has been around $1.1 trillion during 2020. In India, CARE Ratings has assessed the figure to be around `125 lakh crore for the same period. Additionally, more than five lakh jobs have also been impacted. The sector only started to gain pace since the third quarter of FY 2021 and the leisure tourism segment was the first to pick up. Since January 2021, after relaxations in various sectors, people slowly started travelling again. The Union Government has also started to focus on the religious tourism segment. In this backdrop, industry insiders expected a substantial allocation by the government to boost the domestic tourism sector. 


The Association of Domestic Tour Operators of India (ADTOI) also suggested earlier that the government should declare 2021 as the ‘Year of Domestic Tourism in India’. The association expected that such a move will augment the domestic tourism industry in India.  


The Budget


In the 2020 Union Budget, the government had announced an allocation of `2500 crore for the tourism industry but the pandemic played spoilsport. This year, the government has neglected the tourism sector entirely. Rather, the government has reduced 19% from the tourism department’s budgetary allocation. According to experts, this significant dip in government expenditure will be detrimental for the tourism segment. The present allocation is to the tune of `2026.77 crore of which `1088 crore has been assigned for development of tourism infrastructure. In the previous year, it was `1655 crore.


The budget has allocated a considerable amount of `1,18,101 crore to the National Highway Authority of India (NHAI) and has assured to complete 11,000 km of national highway infrastructure. This improved connectivity will eventually help the tourism sector. The government has also included additional 217 projects to the previous National Infrastructure Pipeline.


Gurbaxish Singh Kohli, Vice President, Federation of Hotel and Restaurant Association of India (FHRAI), said in a statement, “Hospitality and tourism roughly account for 10% of India’s GDP and employ nearly 9% of India’s working population. Yet, it failed to find space in the Union Budget. The hospitality industry has been bleeding.”


What is lacking in the budget?


The Federation of Associations in Indian Tourism and Hospitality (FAITH) was expecting that the government would bring down the 18% GST for hotels to 12% GST as a revival measure. Nakul Anand, Chairman, FAITH in an opinion to Outlook Traveller commented, “The Union Budget laid out budget proposals for enhancing rail, road, ports, metro-lite infrastructure and PPP in buses, airports and ports including vista coaches in tourist routes. These infrastructure measures may boost tourism over a long term but only once they are implemented.”


FAITH wanted an income tax exemption on travelling within India. Anand also stated that the Union Government could also allocate incentives to Indian corporates for undertaking domestic MICE (Meetings, Incentives, Conferences and Events) by offering a ‘200% weighted income tax expense’. Not only in India but the global tourism sector struggled last year. To overcome this, FAITH stated that a corpus of around `2,500 crore was needed for global branding of three tourism segments namely Indian MICE (Meetings, Incentives, Conferences and Events), Indian adventure and Indian heritage. A ‘Natural and Cultural Heritage Restoration Fund’ has been one of the major demands with a corpus of at least `2,000 crore to encourage adventure tourism and cultural tourism. But none has been achieved. 


The employment scenario was also dipping due to the pandemic but the budget has overlooked it and no ‘direct support’ has been announced. The sector is now hoping for increased tourist-footfalls because they did not get the government’s attention. A major inflow of international tourists remains a far cry with India still in the process of mitigating the crisis. Under the given circumstances, the road is tough for the Indian tourism industry.



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