Budget 2021: No respite for the Travel & Tourism Sector

The Travel and Tourism sector is a significant contributor to the country's GDP. COVID-19 had halted travel with zero movement in the initial months of the pandemic. The Travel and the Tourism sector have only recently started resuming back to normal with the industry hoping to get some relief from Budget 2021.

Although there has been no direct support from the government in terms of relief and compensation, The Finance Minister, Nirmala Sitharaman did propose 35,000 crore for COVID-19 vaccines, privatisation of AAI airports in tier 2 and tier 3 cities to monetise the assets, no raise in the tax slabs, major highway projects in Tamil Nadu, Kerala, West Bengal and Assam, all of which will help the sector in the long run. 

What are the industry leaders saying?

Subhash Goyal, Chairman, STIC Travel Group of Companies and Honorary General Secretary-FAITH, said, “This was a great opportunity for the Government to revive the Tourism Industry and save at least 30-40 million jobs which are on the verge of extinction out of 75 million people who are directly and indirectly employed in this industry. Not just Tourism, it had no mention of the services sector which is a largest employment generator, in this Budget.”

Goyal added, “There are a few good things which may indirectly help the Tourism Industry like more Tourist Coaches and Trains in the Railways. Privatisation on PP basis of Sea Ports may help Cruise Tourism and 35,000 crores on Vaccine and increasing medical infrastructure may indirectly help Medical Tourism.”

Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) Ltd., said, “Against the challenging backdrop of the COVID era, the Union Budget 2021-22 is an expansionist budget: We welcome the much needed investments in healthcare, focus on capital expenditure, prioritisation of assets, privatisation and no change in taxation – structured around a clear pivot to inspire economic growth. While the six pillars of the Budget presented a diversified approach to fundamentals, across health, capital, infrastructure, inclusive development, human capital and innovation, focus on the Travel and Tourism sector has been noticeably absent.”

Menon further added, “We welcome the focus on transportation infrastructure that forms a crucial base for Inbound & Domestic Tourism -  with the announcement of a Rs.1.18 lakh crore outlay for the Ministry of Road Transport and Highways; equally the proposal of a future-ready rail system by 2030 and the next phases of metro projects in key cities with the 'Metro Lite' & 'Metro New' concepts for tier 1 & 2 regions. From an aviation perspective the announcement of airport privatisation in tier 2 and 3 cities/towns will serve as a boon towards access and affordability; the creation of a hub & spoke model will serve to catalyse the government's initiatives around Project UDAN and Regional Connectivity."

Naveen Rizvi, Executive Director, Integrated Conference & Event Management (ICE) said, “On a broader look, the Union Budget 2021 is a very interesting budget which focuses on infrastructure, agriculture, healthcare, education and industrial sectors. From a travel and tourism perspective, focus on enhancing connectivity across road, rail and air modes of transport will boost domestic tourism in the country. However, a little budget allotment in infrastructure for a new convention center in North East India and some tax relief would have been a boon for the industry.”

Echoing the same sentiments as Menon, Indiver Rastogi, President & Group Head, Global Business Travel, Thomas Cook (India) Ltd. said, “The Union Budget 2021-22 included 3 announcements covering the aviation sector with potential to deliver long term positive impact. Privatisation of smaller airports in tier 2 & 3 cities under the asset monetisation program will serve to extend accessibility to regional circuits and India’s hidden gems, and also increase affordability of air travel. This initiative will aid in the creation of a viable hub & spoke model to catalyse the government’s initiatives around Project UDAN and boost regional connectivity. The spotlight on disinvestment is welcome – with the inclusion of Air India in the target set for FY22 and an overall target of Rs 1.75 lakh crore. Benefits towards aircraft leasing was provided via a tax holiday on capital gains for a set up in GIFT City-Ahmedabad and tax exemption for aircraft lease rentals paid to foreign lessors.”

Rajeev Kale, President & Country Head – Holidays, MICE, Visa, Thomas Cook (India) Ltd. said, “The Union Budget 2021-22 that offered considerable scope to catalyse Domestic Tourism was noticeably silent on specific announcements towards the travel and tourism sector. A 19 per cent reduction in the tourism budget from Rs. 2499.83 crore to Rs. 2023.04 crore is a strong concern for a sector that contributes 10 per cent to the country’s GDP and is a critical source of employment for travel, tourism, hospitality and allied industries.”

Kale added, “Despite the downside, Budget focus on infrastructure is of value, flagship corridors/expressways such as the Delhi-Mumbai Expressway, Bengaluru-Chennai Expressway, Kanpur-Lucknow Expressway, Delhi-Dehradun  will serve to further bolster connectivity and hence domestic tourism. Advanced Traffic management system in all new four and six-lane highways will make for safe and smooth road travel.The focus given to connectivity via expansion of metro rail projects and the concepts Metro Lite and Metro New with augmentation of city bus service is a noteworthy initiative. Hygiene-Sanitation are crucial aspects of Tourism and the Budget covered a slew of waste management, pollution control, with an allocation of Rs. 1.41 lakh crore over 5 years as part of the Urban Swachh Bharat Mission 2.0.” 

Vishal Suri, Managing Director, SOTC Travel, says, “Union Budget 2021 focused on infrastructure, agriculture, healthcare, education and industrial sectors. While the Union Budget 2021 did not directly address several of the demands being made by the travel and tourism industry, it addressed a relatable need that acts as a medium for growth of the infrastructure sector. More economic corridors are being planned to boost road infrastructure with an allocation of 1.18 Lakh Crore. The government has set an ambitious target of building infrastructure in the country with special scheme to nudge states to spend more of their budget on infrastructure, providing Rs 1.10 Lakh Crore for railways, privatisation of airports and Indian railways national rail plan for India to prepare a future-ready railway system by 2030.”

“These contribute towards sustainable growth within the tourism sector. With airports to be privatised in tier 2 and 3 cities, it will improve regional connectivity. Addressing concerns like immediate waiver / rationalisation of 5 per cent TCS for outbound tourism, rationalisation of taxes will create the necessary boost for the tourism segment,” Suri added.