UNION BUDGET 2014 - 15

Few Positives, But Overall Fails To Match Up To Expectations Of Hospitality Sector

Mumbai: After raising hopes and conveying optimism in the run up to the Union Budget, the Budget itself has been lackluster from the hospitality point of view and has failed to match up to expectations.

“We had expected that this budget would concentrate on some critical areas like lowering the minimum project cost mandated for inclusion of hotels in the Reserve Bank of India’s Infrastructure Lending List, restoration of the Depreciation amount on hotel building, exemption from deducting tax at source at the rate of 10 per cent on commissions paid to travel agents, exemption from Service Tax and de-liking of taxes with star category of hotels. There was so much the Government could have done, and did not. We are disappointed,” says Mr. Kamlesh Barot, immediate past-President, HRAWI.

The HRAWI felt that while tourism was provided some support, hospitality as a sector was completely ignored. “While we appreciate the government’s commitment to boost tourism, we are at loss to understand why the Finance Minister (FM) has not addressed any of the concerns of the hospitality industry. The FM has set aside Rs. 500 crores for developing 5 tourist circuits in the country but without adequate hotels, the tourists arriving at these destinations will experience a deficiency in quality of services,” adds Mr. Barot.

The association has however expressed that not all the announcements were negative. The industry did also get a few positives to take home. “The budget has allocated generous funds for development of tourist circuits; air, road and rail infrastructure; archeological preservations and defense museums. As had been indicated in the pre-election manifesto for the development of tourism circuits, the budget announced setting aside Rs.500 Crores and has dedicated separate funds for improving facilities at pilgrim destinations, for augmenting national heritage sites and also for the development of archeological sites across India. These will benefit the hospitality sector in the long run,” says Mr. D.S. Advani, President, HRAWI.

The FM also has proposed an international convention centre on PPP mode in Goa, announced E-Visa scheme to be introduced in a phased manner at 9 airports and also set aside 150 crores on women’s safety in cities.

“From the viewpoint of improving and encouraging Foreign Tourist Arrival (FTA) in the country, the FM has made tangible provisions. Introducing Electronic Visa Scheme will definitely reduce the hassles a tourist faces on a visit here and will prove to be a boon in the long term. Besides, gradually expanding this to Visa-on-arrival will be icing on the cake. Women’s safety another sensitive tourist issue that has been addressed. Most importantly, the FM has identified Goa as an international venue considering the vast untapped potential of the state and would mean good occupancy for hotels there,” says Mr. Gurbaxish Singh Kohli, Vice-President, HRAWI.

“The Union Budget includes some innovative measures to facilitate long term financing for infrastructure. The Government has also indicated that Public Private Partnerships will be the preferred mode of undertaking most projects relating to urban renewal, physical and economic infrastructure. Some of these measures should augur well for the industry as a whole,” says Mr. Pradeep Shetty Hon Secretary - Hotel and Restaurant Association Western India.

“Although, the Union Budget has clearly paved way for the development and progress of tourism in India, the hospitality sector that functions as its backbone has been completely neglected. From the several funds and incentives allocated to various projects declared by the government for the growth of tourism, not a single sop was given for betterment of the hospitality sector. But the sector is still hopeful that the government will understand the potential of the industry and provide some support in the coming future,” concludes Mr. Kamlesh Barot, immediate past-President, HRAWI.