The Union Budget for FY2020-21 focused on three key themes – aspiring India, economic development and caring society. FM Nirmala Sitharaman presenting her second Budget focussed on the demand purview of the economy by relaxing income tax slabs, hence putting more money in the taxpayers’ hands. Furthermore, she relaxed the long-trailing demand of the travel and hospitality industry of inclusion in the budget by allocating Rs 2500 crore for the tourism sector for the current fiscal which gained a feeling of encouragement within the industry. Industry experts shared their views on the Budget. Surendra Kumar Jaiswal, president, Hotel and Restaurant Association of Northern India (HRANI), said, “The Union Budget 2020-21 is a progressive document to ensure economic growth. Measures for enhancing investment climate, boosting transport infrastructure and education and push towards digitalisation will spur tourism and hospitality sector. The proposal to develop iconic sites with on-site museums is a welcome measure to boost tourism. Besides, the proposal to establish more airports and monetise 12 lots of highway bundles of 6,000 km by 2024 will lay the framework for enhancing the attractiveness of India as a tourism destination. The proposal of earmarking a fund for cleaner air will ensure sustainable living.” Giving a mixed view, Gurbaxish Singh Kohli, VP, FHRAI & president, HRAWI, said, “This Union Budget, like the preceding Budget has neglected the hospitality industry. While the budget allocation of Rs 2500 crore for the tourism sector sounds like it may translate to spill-over benefits for the hospitality sector, we don’t have sufficient information about where or how the funds will be used. The increase in the number of Tejas type trains to iconic destinations has the potential to boost travel but alas is vague. The construction of 100 airports is also an encouraging announcement but unless infrastructure is boosted nothing will take place. We have been expecting reforms in rate slabs of GST, Input Tax Credit (ITC) and a definitive step to boost the domestic and inbound traffic. It has been our long-pending demand to include tourism in the concurrent list which has not seen the light of the day, nor has hospitality been given infrastructure status. Unfortunately, none of the concerns of the industry has been addressed in this Budget.”
Gaurav Dewan, COO and business head, Travel Food Services, said, ”The government’s focus on development is clear and reinforced with the allocation of additional funds to the Airport, Railway, and the Highway sectors. This will boost business and leisure travel thereby generating employment, connectivity and overall economic development of catchment areas.With digitisation and infusion of positive funds in the economy, we look forward to rubber hitting the road in the days to come.” Ravichandran Purushothaman, president, Danfoss India’s response to the Union Budget 2020, said, “The budget restores our confidence for agriculture and allied industries to increase their contribution to GDP in the coming days. With the expansion of NABARD refinance scheme and extension of Agri-credit to Rs 15 lakh crore, there definitely is a greater scope to address the industry’s challenges at a grassroot level. The ability of states to fuel infrastructure support in tandem with the push for increased cold chain infrastructure for agriculture, horticulture, dairy, and fisheries will be key to tackling the food loss in our country. With efficient implementation, the Kisan Rail and Krishi Udaan schemes will be helpful in buckling down the overall cost within the farm-to-fork process, thereby driving profitability for farmers and reducing prices for consumers. Additionally, the vision to double our milk capacity to 108 MT tonnes by 2025 and raise fish production to 2 lakh tonnes through FFPOs will help in building a new ecosystem of start-ups across the agri and allied sectors and thereby help create newer job opportunities in the nation. Overall, the budget this year certainly brings in exciting times ahead as we look forward to great advancements in our rejuvenated ecosystem.” Preety Arora, head – Business Strategy, Amatra Hotels & Resorts, commented, “Budget has given the Indian hospitality sector the requisite boost by its initiative of developing museums in five archaeological sites. This would aid in creating the much needed social infrastructure around these locations and boost employment opportunities as well. New properties and resorts will come up in these locations and cater to these travellers. Also, the allocation of Rs 2,500 crores for tourism promotion in this fiscal would abet in attracting domestic and international travellers to various locations in India.” Jaideep, Ghosh, partner, Travel, Hospitality and Leisure, KPMG in India, pointed out, “Continued emphasis on infrastructure, energy, education, healthcare will boost the economy over the long term. National Infrastructure Pipeline projects worth US$14 trillion, if implemented on a timely basis, would be a game-changer.” Roop Pratap Choudhary, MD, Noor Mahal, noted, “This budget is certainly a booster for the promotion of India’s heritage, tourism, and rich cultural diversity. This will provide flourishing ground for the hospitality sector. We welcome the move of the FM towards the creation of a robust infrastructure by announcing the development of more than 100 airports till the year 2025. This will allow the new and offbeat destinations to emerge and grow at a faster rate. Announcing Rakhigarhi, Haryana amongst the five archaeological sites with on-site museums would also put Haryana now on the map of the international travellers. In the near future, we expect a more flexible and tolerant financial environment from the government to give small hospitality players to explore more growth avenues.”
Sonica Malhotra, joint MD, MBD Group, voiced, “It is a holistic budget which caters to all segments of the economy primarily education, health & women welfare, infrastructure & agriculture. What is heartening to see is that the government has put a lot of emphasis to boost the tourism sector. Announcement such as development of archaeological sites and world-class museums at five identified sites and allocation of Rs 2,500 crores for tourism promotion will not only further enhance the country’s ranking on the Tourism Competitive Index but will also generate huge employment opportunities.”
Ankur Bhatia, executive director, Bird Group also had a mixed reaction. “The decision to develop five more archaeological sites will surely increase both international and domestic tourist inflow. The number could have been much more than just five, considering the wide array of decrepit historical sites in the country crying for development. While we welcome these development-oriented announcements, the hospitality industry was also expecting a full-blown infrastructure status for the hotel sector and further rationalisation of Goods and Services Tax (GST) on hotel rooms. Infrastructure status for the hotel industry can alleviate the funding woes the sector is currently staring at, as liquidity with the mid-sized hotel players has almost dried up. In the absence of seamless debt flow, equity alone will not suffice,” he said.
Sarbendra Sarkar, founder & MD, Cygnett Hotels and Resorts, opined that the government’s push for infrastructure development by building more airports and announcement of new Tejas-like trains will boost tourism outside the main centers. “This, in turn, will have a positive impact on the hotel sector. We are building hotels in many new locations and with this kind of infrastructure development, we will surely be a gainer,” he said.
JB Singh, president and CEO, InterGlobe Hotels, noted, “With Rs 1.7 lakh crore being allotted for transport infrastructure in terms of expansion of highways, new Tejas trains and 100 more airports getting announced, we expect seamless travel between tier II and urban cities. The initiatives to develop 5 new smart cities, as well as building archaeological sites with on-site museums, will open new avenues and experiences for visitors and boost travel.”
Arjun Raj Kher, brand head, Hitchki and Bayroute said, “There has definitely been an increase in the budget allocation for the Tourism and Hospitality industry, from Rs 1416 cr in FY19 to Rs 2500 cr this fiscal year, but since this is one of the fastest growing industry, there could have been a better announcement. Some positive changes have also been announced such as concession in corporate tax rate, which will be beneficial, help us to remain competitive in the market and also help create maximum employment. A proper budget has also been set aside for food processing sector, which will boost the rural economy.”
Rahul Chaudhary, CEO & MD, CG Hospitality & CG Corp Global said, “The tourism industry’s proposed Budget allocation of Rs 2,500 crore for the financial year 2020-21 is very encouraging. With the growth of tourism comes the creation of jobs. While the tourism sector contributes almost 10 per cent of India GDP, expected to create employment growth of 10 per cent annually. State governments have been given more incentives to promote infrastructure and heritage sites through the UDAN and Tejas schemes which will further link less travelled locations which have the potential to become very attractive circuits. Most importantly, the new personal income tax regime would put higher disposable incomes in the hands of the individuals which would certainly also go into the tourism sector. After all, India’s growth story will always be linked to the rise of the Middle class and subsequently the mid-market segments where the potential of growth is highest.”