The tourism, aviation and hospitality sector had high hopes pinned on the Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman, especially given the Government of India’s vision of Viksit Bharat by 2047 and the critical role tourism plays in achieving this goal. However, the budget fell short of delivering the structural changes necessary to address the fundamental challenges faced by the sector, which is crucial for accelerating growth towards becoming a USD 3 trillion economy by 2047.
Despite the well-accepted multiplier effect of tourism on employment and the economy, several key demands from the tourism and hospitality industry were overlooked. These included, GST rationalisation, Granting of infrastructure status, enhancing ease of doing business and implementing policy reforms
On a positive note, the budget’s focus on infrastructure investment and rural development is set to boost domestic travel. Improvements in roads, transportation, and facilities in rural areas will encourage more Indians to explore their own country. This will support existing tourism destinations and foster the creation of new attractions, catering to the growing interest among Indians to discover diverse landscapes and cultural richness locally.
The budget’s focus on youth employment, skill development, and job creation is particularly welcome, given the hospitality industry’s ongoing shortage of skilled workers. This initiative is expected to provide the sector with the skilled workforce needed to meet growing demands.
Industry reactions
While the budget did not meet all expectations of the industry, the focus on infrastructure, rural development, and tourism enhancement offers a glimmer of hope. These initiatives are expected to support the sector in overcoming current challenges and contributing to India’s long-term vision of becoming a top global tourism destination.
Madhavan Menon, Executive Chairman, Thomas Cook India said the industry is disappointed to note that key pillars in India’s tourism agenda – aviation & hospitality were not mentioned as part of the budget and both standardisation of GST rates on hotel tariffs to 12 per cent and the reduction of ATF remained unaddressed.
“We’re optimistic about the significant allocation of INR 11.11 lakh crore towards infrastructure development. The development of road, rail, air, and waterways will ensure a boost to access/connectivity and affordability, and force multiplier benefits for tourism and allied sectors. But the discontinued SEIS scheme should have been reinstated, as this is meaningful towards encouraging inbound tourism, foreign exchange receipts and a force multiplier for employment generation,” he added.
Whereas, Naveen Kundu, Managing Director, EbixCash Travel Group & Chairman, MICE & Business Travel, FICCI said that the already neglected sector has been simply ignored.
“The union budget 2024 is appalling when it comes to tourism. It’s all talk and no action! Where have initiatives like “Meet in India” and “Chalo India” disappeared to? Can all that be achieved with a budget of just INR 33 crores? (I’m certain even that will remain unspent.) This budget is bizarre and deeply disappointing! I am surprised that even after the G-20, there has been no effort to learn. There are lessons to be learned from neighboring countries like Thailand, Malaysia, Singapore, and Hong Kong, which subsidize incentives for incoming tourists, thereby achieving significantly higher visitor numbers from India. Now, all the Department of Tourism will do is hold endless meetings, spending money on tea and samosas, discussing how to promote ‘Make in India’ and ‘Chalo India.’, ” he mentioned.
While the Finance Minister highlighted infrastructure development for a few religious locations in her budget speech, TAAI criticised the government for choosing sites with poor connectivity and limited domestic or inbound tourism interest. The association believes that upgrading existing popular locations and enhancing last-mile connectivity would have been a more effective strategy.
Hospitality sector remains optimistic
While disappointed, the hospitality sector remains optimistic due to the budget’s emphasis on infrastructure development, employment generation, and skill development. The focus on developing religious tourism centers is seen as a silver lining that may help address some of the sector’s critical challenges.
Sharing his thoughts, KB Kachru, President, Hotel Association of India and Chairman – South Asia, Radisson Hotel Group said, Regrettably, however there has been no policy announcement to facilitate the development of hotels and promotion of inbound tourism. The announcement of GST simplification, comprehensive review of the income tax Act provides some hope for the sector that has been seeking rationalization of taxes. The benefits to individuals on taxation will augment the spending power. The focus on skilling and incentivizing employers for creating jobs are other positives that will benefit all sectors. Although not directly linked to this budget, the industry would continue pursuing it’s ask for grant of infrastructure status for the hospitality sector and industry-related benefits by all state governments.”
Pradeep Shetty, President, FHRAI & HRAWI mentioned, “Some key demands of tourism & hospitality to revitalise the sector such as GST rationalisation, granting of infrastructure status and bringing ease of doing business and policy reforms have not been considered in the budget once again, given the well accepted multiplier effect of tourism on employment and economy. Although the budget falls short of our expectations for transformative changes in the tourism and hospitality sectors, we acknowledge its positive focus on infrastructure, rural development, and skill enhancement.”
Industry requires significant investments
SP Jain, Chairman and Founder, Pride Hotels Group said that as a highly capital-intensive sector, the industry requires significant investments, and the initial 3-4 years often yield no profits due to high-interest loans from banks. “However, we had hoped that the Finance Minister would grant infrastructure status to the hospitality industry. Granting infrastructure status would enable us to access loans at lower interest rates, facilitating the development of more hotels and improving the quality of facilities offered. This is essential to attract both Indian and international tourists and to support the overall development of our industry,” he added.
Pushpendra Bansal, COO, Lords Hotels & Resorts stated, “Unfortunately, our key appeals, such as granting infrastructure status to the hospitality sector, an increase in marketing and promotional budgets to boost inbound tourism, and a reduction in GST rates for travel and hospitality, were left unaddressed.”
This will also be the first budget of the new Narendra Modi-government following the Lok Sabha elections, and the nation awaits with bated breath. As the Union Budget 2024 approaches, the travel and tourism sector remains optimistic about strategic investments and initiatives that could propel India into becoming a leading global travel destination, further enriching its economy and cultural heritage.
