INDIA: The Union Budget for 2021-2022 was presented by Finance Minister, Nirmala Sitharaman today, and it turned out to be a mixed bag for the ailing Indian tourism and hospitality industry.
The tourism and hospitality industry finally showed signs of relief as Budget 2021-22 allocated Rs 2500 crore, and infused Rs 1.7 lakh crore in the infrastructure sector, doubling of aircraft fleet and enhanced focus on cultural tourism among other announcements. The govt. has also proposed to establish an Indian Institute of Heritage and Conservation under the ministry of culture, besides allocating Rs 3150 crore for the ministry of culture.
COVID-19 impact on Tourism and Hospitality
COVID-19 has had a devastating impact on the economy in general and the tourism and hospitality sector in particular which incidentally is the second largest contributor to the national GDP and employment growth after the IT sector. The industry saw a decline by over 70% in jobs directly and leftover 40 percent of all establishments including hotels either closed or on the brink of permanent closure. CARE Ratings also estimated losses to the tunes of Rs 1.25 lakh crore during the calendar year 2020 to the Indian tourism industry.
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It was estimated that it will take businesses two to three years’ time to return back to pre COVID-19 levels. A blueprint for revival was badly needed in form of help from the Government and it was going to be crucial in speeding up return to normalcy.
Positive signs were seen over the last few months and especially during the festive weekends last year. Several factors, like the latest travel trends including staycations and workcations, weekend getaways, family travel, and the introduction of new tourism attractions started contributing to the upward trajectory of domestic travel. Also with vaccination against the coronavirus underway, the sector was hoping for a turnaround.
Going forward, coming from a pandemic, the travel sector was hoping for Finance Minister Nirmala Sitharaman to announce measures to substantiate this optimism, and she did not disappoint this time. Her proposals and the overall focus on infrastructure spending by the government will make the travel industry an indirect beneficiary and certainly will go a long way to increase inbound traffic to India, thereby help the travel retail economy grow.
The finance minister said India currently is ranked 34th (up from the 65th rank in 2014) in the Travel and Tourism Competitive Index (World Economic Forum) and the positive aspect due to this is the growth in foreign exchange earnings by 7.4% to Rs 1.88 lakh crore for January 2019 from Rs 1.75 lakh crore.
Budget 2021-22 is hailed as a holistic budget catering to all segments of the economy, primarily education, health & women’s welfare, infrastructure, and agriculture. For people in the tourism industry, it certainly is heartening to see is that the government has put a lot of emphases to boost the tourism sector. It was time now that tourism was given the importance it deserves and this budget will certainly provide flourishing ground for the hospitality sector too and promote India’s heritage, tourism, and rich cultural diversity.
The proposals of the budget to increase the infrastructure spending, steps to create iconic destinations, destination development by States, proposal to introduce Tejas trains to connect tourism destinations, proposal to set up 100 new airports by 2024, and doubling of aircraft as part of the unique Udaan scheme, the addition of 2000 km of strategic highways, setting up of an Indian Institute of Heritage and Conservation with the status of a deemed university, etc. will go a long way in accelerating the contribution of the sector towards India’s economy. The national deemed university for heritage tourism will also give a boost to skill development in the field of heritage tourism. The decision to develop five more archaeological sites would also increase both International and domestic tourist inflow.