FM Nirmala Sitharaman’s maiden union budget has offered lip service to the travel and tourism industry. Heavy pre-budget engagement at the MoT (Ministry of Tourism) level with travel trade bodies to understand key issues and policy interventions required, seems now like an eye wash. The trade is disappointed that once again the tourism industry always lauded by every government on every public platform as critical to the Indian economy for its foreign exchange earning and employment generating capacity, has been given a raw deal; rather no deal at all.
Since tourism is an elitist industry (yes, that is what our netas feel), no grassroots politician serving in the cabinet wants to appear warming up to this sector. But Sitharaman is not a grassroots politician. She is well educated, widely travelled and entered politics for the right reasons at age 49. Compulsions of vote bank politics, I guess. No Infrastructure Status for hospitality industry; No Export Status for forex earning houses; GST at 28 per cent remains; Input Tax Credit (ICT) imbroglio continues; a paltry increase in budgetary allocation of Rs. 39 crore YoY for tourism; and peanuts for UDAN Regional Connectivity Scheme!
Crude oil prices have relaxed, but Indians will pay more for fuel thanks to the move to slap additional excise duty as well as road and infrastructure cess by a rupee each per litre. This will break the liquidity in middle class households and thereby consumption, adversely impacting domestic tourism. The cost of Aviation Turbine Fuel (ATF) remains a concern as it constitutes around 35 per cent of the total operating costs of an airline in India.
Transportation infrastructure forms a critical base of the travel and tourism sector and hence the budget announcements that focus on road and waterways through Bharatmala, Jalmala and Sagarmala schemes and equally on massive railway modernisation and safety initiatives, backed by an overall budgetary outlay of Rs. 100 trillion in the next five years, is truly a welcome move. The initiative to promote 17 destinations as Iconic Tourism Sites is appreciable. The FM’s announcements on relaxing FDI in aviation, aircraft financing and leasing, policy interventions for developing India as an MRO (maintenance, repair and overhaul) hub are well intentioned. One Card-One Nation scheme when implemented will ease inbound travel.
It is also important for the industry as a whole to sharpen its tone, louden its voice and stop ‘pleading’ for what are rational policy interventions. Considering what the industry delivers on many counts, there are no favors being sought here. As one of the biggest contributors to GDP, taxes, foreign exchange and most importantly in generating employment, travel and tourism industry deserves better. It is high time the ‘new’ FM and the ‘old’ government realises that.