Budget 2017 receives mixed reaction from travel and tourism sector
Chirajit Nath - on February 7, 2017
The travel and tourism industry is upbeat about being endorsed as a sector of economic importance by the Finance Minister in Budget 2017. The budget allocation for tourism presented by Arun Jaitley, Union Finance Minister was pegged at Rs 1,840.77 crore. This is a moderate increase of 15.75% approximately, compared to Rs 1,590 crore allocated to tourism in the budget of 2016.
Jaitley has proposed setting up of Special Tourism Zones (STZs) to boost private investment in the tourism sector in the country. The Finance Minister also proposed Special Purpose Vehicle (SPV) with funding from both the government and the private sector to trigger investment into the Special Tourism Zones.
“Tourism is a big employment generator and has a multiplier impact on the economy. Five Special Tourism Zones, anchored on SPVs, will be set up in partnership with the States. Incredible India 2.0 Campaign will be launched across the world,” said Arun Jaitley in his presentation.
However, factors like increasing service tax levies on outbound tour operators from India to an effective nine percent from January 22 was not addressed or rolled back in the budget.
Also regarding airlines, Jaitley stated select airports in Tier II cities will be taken up for operation and maintenance in the PPP (full form) mode. Airport Authority of India Act will be amended to enable effective monetisation of land assets. The resources, so raised, will be utilised for airport upgradation.
Others who also voiced their opinions about the Budget are as follows:
Pronab Sarkar, President, Indian Association of Tour Operators (IATO)
We had good expectations from this year’s budget in the form of Sops & Incentives to open up huge investment opportunities and viable business avenues. Also, service tax on tourism sector will be brought down to make India’s holiday packages competitive. As tourism and hospitality industry, we found it a very ‘Dry Affair’ as the budget had nothing special to offer to the tourism industry.
Only good thing is that the Union Budget made a brief reference of tourism as a source of employment in the country and announced setting up of Five Tourism Special Zones and Incredible India Brand will be taken to the second stage of global Campaign for boosting tourism.
Guldeep Singh Sahni, President, Outbound Tour Operators Association of India (OTOAI)
OTOAI is very disappointed with the budget for 2017-18. The increasing heavy tax burden is a major deterrent in the growth of tourism sector, especially for outbound tour operators, who are witnessing a drastic downturn in business with the recent tax ruling and the upcoming GST. This is further challenging the travellers, jobs and revenue generation for the country. There is nothing in the budget to boost outbound travel. Even the domestic travel sector hasn’t received much of a philip. The government keeps highlighting the importance of tourism but it’s all in vain.
Sunil Kumar R, President, Travel Agents Association of India (TAAI)
There was not much in the Budget for the travel and tourism industry. We were expecting some good news on the Service Tax issue but no exemption has been considered by the central government for our much-talked about sector. The inbound travel sector too, has been overlooked, which contributes heavily to the foreign exchange earnings. I don’t feel we have had any concrete takeaways from this budget.
PP Khanna, President, Association of Domestic Tour Operators of India (ADTOI)
The present budget hasn’t much focused on the tourism and hospitality sector. Though indirect benefits such as infrastructure development, skilling of youth and enhancing of education system is sure to have a positive effect in the long term. With such initiatives, people will experience better facilities and better education will also give them an improved civic sense. The Finance Minister announced setting up of 100 foreign language institutes pan India and has allocated funds for women safety.
The government is spirited to turnaround basic facilities and other related sectors will also fall in shape in due course of time. Overall, by 2020, I believe that the travel and tourism industry will be in a much better shape.
Aashish Gupta, Consultant CEO, Federation of Associations in Indian Tourism & Hospitality (FAITH)
We are glad that the Minister has spoken about the importance of the tourism sector and that it can create a huge multiplier effect. One of our key proposals on setting up five special tourism zones has been accepted but the immediate pain points of the industry have not been addressed. The government did not have to tinker with the service tax levy before the GST and could have let it be. Steps, like promoting the incredible India campaign, operationalising tier II, tier III airports, listing of IRTC and eliminating the service charge on e-tickets booked through IRCTC and those by defence personals.
Mahesh Iyer, COO, Thomas Cook (India)
This budget has very little to offer to the tourism industry, but with plans to launch Incredible India 2.0 as the next phase of growth for domestic tourism with respect to India, there is something to look forward to. In the Railway Budget, one of the biggest announcements is the withdrawal of service charge on rail tickets booked through IRCTC. Another significant development is the emphasis on safety and sanitation, by introducing bio-toilets, which will increase passenger comfort. With emphasis on a Digital Economy, by introducing measures like elimination of service charge while booking rail tickets on IRCTC, launching DigiGaons to facilitate employment & skilling, and even augmenting transactions done via the BHIM app; the Finance Minister has laid out a path that directs the country towards digital transformation. We are confident that the steps charted in the Budget will act as catalysts for change and thus move people from the unorganised sector to organised sector. Having said that, from my point of view this budget is a subdued one.
Peter Kerkar, Director, Cox & Kings Ltd
Infrastructure is a part of the 10 most important themes in Union Budget 2017 with allocation for infrastructure at a record Rs 3,96,135 crore. Road and rail infrastructure are crucial in terms of boosting tourism as these are widely used mode of transport in India. In this context, stepping up the allocation for national highways to Rs 64,000 crore, announcement to launch dedicated trains for pilgrimage/tourism and service charge withdrawal on booking of rail tickets are welcoming moves which will help to accelerate domestic and inbound travel. Provisions made for clean and safe rail travel and making 500 rail stations disabled-friendly are also encouraging.
We are quite positive about the focus on rural infrastructure development as we see a scope to promote rural tourism even further, especially for inbound tourists. However, we need to know more about what all will be covered in five special tourism zones to be set up in partnership with states.
Vishal Suri, Managing Director, SOTC Travel
The Union Budget for 2017-18 would help to boost the rural, infrastructure and industrial sectors. The move to set up five special tourism zones in partnership with the states and to launch the Incredible India’s second campaign across the world is a sign that government thinks tourism is an important part of the global economy and a significant employment generator. Development of tier-II airports through PPP mode will give boost to the travel from small cities. Focus on railway security and up gradation of services is expected to give boost to rail tourism. Series of initiatives on digital payment is expected to bring efficiency in the collection and is positive for the formal sector. The ban on cash transaction over INR 3 Lakhs is a welcome move and it is expected to provide a level playing field.
Ritesh Agarwal, Founder & CEO, OYO
The launch of the Incredible India 2.0 campaign will result in greater tourist interest and inflow from overseas, creating a huge demand and opportunity for the Indian hospitality industry. The proposed creation of 5 special tourism zones in partnership with state governments will also provide excellent fillip to domestic tourism. It is encouraging to note the government’s focus on infrastructure development as it forms the backbone of tourism and hospitality sector. Furthermore, reduction in tax rate for SME and the push towards digital economy by de-incentivising cash transactions will support new-age businesses and start-ups.
Shikhar Aggarwal, Joint Managing Director, BLS International
The Union Budget 2017 brings multifarious opportunities for the tourism sector. Establishment of five special tourism zones in partnership with the states will attract more foreign travellers and grow the inbound travel. Announcement of the second campaign of Incredible India across the globe and development of airports in tier-II cities is another great move in making India as an ideal tourist destination. Further emphasis on Infrastructure with the allotment of Rs 3,96,135 crore in FY17-18 by Finance Minister Arun Jaitley will provide the required stimulus to Incredible India campaign.
Rishi Puri, Vice President, Lords Hotels & Resorts
We had hoped for the FM to announce some incentives for investing in new projects in the tier 2 & 3 cities that draw tourists but lacks good hospitality infrastructure. Many renowned and international hospitality groups are investing in India because they too see the growth potential here. However, the Government has not doled out anything of much consequence to the sector. Except for the five percent reduction in tax for MSMEs which will elevate the tax burden on us, there is nothing that hospitality players such as us will benefit from.
Dhaval Jani, Vice-president, Sales & Marketing, V Resorts
We were expecting much more for the travel and tourism industry, and we are a bit disappointed that the Government did not announce any package, incentive for the sector. The good news is the emphasis on improving the infrastructure – that of 3500 railway lines across India, setting up of airports in Tier 2 cities and dedicated trains for religious tourism – will ultimately work in encouraging people to travel more. But it all depends on the implementation and the time for the projects to materialise. The announcement of ‘no service charge’ on IRCTC bookings, done clearly to encourage digitisation is a move that will benefit a company like us. This move will create a healthy approach of travellers towards travel planning online, spells good news as 80% of our transactions happen online.
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