ASSOCHAM seeks Fin Min's intervention to bail out U'khand

Hospitality and tourism together account for about one-fourth of the flood hit state's domestic product

Apex industry body ASSOCHAM today strongly advocated modifying banking guidelines to provide much-needed support to the hospitality and tourism sectors in flood-hit Uttarakhand.

In a letter to the Union Finance Ministry, ASSOCHAM Secretary General D S Rawat said hospitality and tourism were the key source of revenue generation in Uttarakhand and asked the Centre to provide a relief package for these sectors in the flood-ravaged state in the form of loan waivers, tax exemptions and subsidies.

'The Reserve Bank of India (RBI) may look at amending its circular for small and medium enterprises (SMEs), particularly for hospitality industry to give relief for second time restructuring of term loan/deferment of instalments/extension of moratorium period,' Rawat said in the letter.

Hospitality and tourism together account for about one-fourth of the state's domestic product apart from being a key source of employment and income generation from revenue perspective, Rawat said.

'The hospitality and tourism industry in Uttarakhand has sought intervention from policy makers in the Ministry of Finance (FinMin), RBI and the Central government as many players in the industry had availed bank loans for various projects and are now finding it difficult to repay them,' he said.

'As such the Union government along with its key financial institutions should look at formulating a relief package for the state's hospitality and tourism industry in form of loan waivers, tax exemptions and subsidies,' he said.

The ASSOCHAM secretary general also asked the state government to partner with the financial institutions in the process.

'Though rehabilitation of enterprises is done at the level of bankers/lenders, the state government must compliment the efforts of these financial institutions by partnering in the process,' Rawat said.

Citing a recently released study by ASSOCHAM, he said the hospitality and tourism sector alone is likely to suffer direct loss of about 1.8 lakh jobs over the next six months, besides losing over Rs 4,100 crore annually which will put back growth of tourism sector by at least five years.

'Hospitality and tourism sector is likely to be reduced by 75 per cent in the aftermath of devastation caused by unprecedented flash-floods and landslides as the rate of cancellations shot up after the tragedy by a whopping 50 per cent,' he said.

Considering the fact that it would take another three to four years to rebuild infrastructure in the affected areas, the government must look at providing relief to the industry to enable them to sail through these tough times, the ASSOCHAM official added.