The Budget 2017, announced by Finance Minister Arun Jaitley today, has outlined several developments and plans for the tourism and hospitality sector. Jaitley referred to tourism as a big employment generator and has announced that the government will set up five special tourism zones in co-ordination with state governments, alongside launching the Incredible India campaign on international level.
This is the first instance where the Railway Budget has been integrated into the Union Budget. The merger of the Railway Budget with the general budget will give an impetus to the transport sector’s growth, opined PM Narendra Modi.
Jaitley started his speech with reference to the widely debated, demonetisation move of the government. He said, “We have launched a massive war against black money. The government is now seen as a trusted custodian of public money. Demonetisation seeks to create a new normal wherein the GDP would be bigger, cleaner and real. Pace of remonetisation has picked up and will soon reach comfortable levels; effects of demonetisation are not expected to spill over to next year.”
On tourism and related infrastructure front, the Budget saw several announcements for railways, aviation, road and coastal connectivity.
Selected airports in Tier II cities have been identified for taking up operations and development under PPP model. However, the minister hasn’t revealed the specific details on the same.
The focus of railways for the 2017-2018 fiscal will be on passenger safety, capital works and cleanliness, among other issues such as infrastructure upgradation and provisions for passengers. The railways will take steps for launching dedicated trains for tourism and pilgrimage purposes.
In this direction, Indian Railway Catering and Tourism Corporation (IRCTC) had announced last month it will launch the first pilgrim train for the North East region on February 17, which will connect to destinations like Jagannath and Konark temples.
In another highlight of the Budget promoting the government’s digital initiatives, service charge on e-tickets booked through IRCTC have been withdrawn. The government today also removed all duties on devices used in the process of cashless transactions like point of sales machines, finger print readers etc.
INR 1.3 lakh crore has been allotted for solar power and disabled-friendly railway stations. By 2019, all coaches of Indian Railways will be fitted with bio-toilets. Rail safety fund with a corpus of INR 100,000 crore to be created over a period of five years. Jaitley has announced a total of INR 55,000 crore for railways in Budget 2017. Whereas, the transport sector in genaral has been allocated INR 2.41 lakh crore.
A new metro rail policy will be announced, which is expected to open up new jobs for the youth. Additionally, railway-related state-run companies like IRCON and IRCTC to be listed on stock exchanges.
Budget allocation for highways has been stepped up to INR 64,000 crore in FY18 from INR 57,676 crore.
In another traveller-oriented move apart from tourism and pilgrimage trains, Head Post Offices will now be used as the front office for passport services, eliminating the need to travel long distances for obtaining a passport.
Industry speak
Commenting on development and commencing operations at airports in Tier II cities, Harmandeep Singh Anand, managing director of Nagpur-based Jagsons Travels which organises travel trade show in Tier II and Tier III cities, said, “The government has already put in efforts on air connectivity in these cities. This is a welcome move from the government. Today’s announcement will give impetus to travel and tourism in these markets. This will also provide better airport infrastructure such as bigger parking spaces for aircraft, like in metro cities.”
Sarabjeet Singh, vice chairman, Federation of Associations of Indian Tourism & Hospitality (FAITH), said, “The tourism industry welcomes this budget. We see substancial increase in budget allocation for the travel and tourism industry. The finance minister also said that exports are not increasing. I would like to highlight that tourism can play a crucial role to improve this situation. Also, the budget allocation for commerce sector – which contributes to an important amount of our business – has been reduced, but we will hold discussions with the government in the future,” while adding that GST will be beneficial to the industry in the long run.
Jaideep Ghosh, partner and head – tourism and hospitality, KPMG India, stated, “Significant emphasis on augmenting transport infrastructure and railway safety and convenience would have positive impact. However, these measures are incremental in nature, and are expected to provide only a moderate boost. Nonetheless, reduction in taxes levied on small and medium businesses is likely to provide some comfort factor to the sector, which is currently adversely affected by a relatively high taxation in comparison with other tourism-focussed countries. Further, proposed relaxation in labour laws is also likely to provide relief to the labour-intensive sector. In conclusion, the tourism and hospitality sector would need greater support from the government to thrive in an increasingly competitive domestic as well as international markets.”
Rajiv Vij, CEO and MD, Carzonrent.com, commented, “The Union Budget presented brings out the progressive outlook of the government for businesses as well as individuals. The investments proposed in the area of skill development are a welcome step. The investments in building national highways is a welcome step for the car rental industry. The impact of the demonetisation drive is visible with progressive steps taken for an inclusive and cashless economic future of India.”
Vishal Suri, MD, SOTC Travel, said, “This budget would help to boost the rural, infrastructure and industrial sectors. 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. Focus on railway security and up gradation of services is expected to give boost to rail tourism. Measures to control defaulters as announced in the budget, was the need of the hour. Development of Tier II airports through PPP mode will give boost to the travel from these areas.”
Peter Kerkar, director Cox and Kings, expressed, “Infrastructure is a part of the 10 most important themes in Union Budget 2017. 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 INR 64,000 crore, announcement to launch dedicated trains for pilgrimage and 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.”
Ashwini Kakkar, executive vice-chairman, Mercury Travels, felt that the budget could have been more focused on the tourism industry. Sharing his views on GST, Kakkar said, “Services constitute 65 per cent of the GDP, but there’s lack of clarity on the taxing of services under GST, which is crucial.”
