Hospitality, tourism may come under infra ambit

Govt proposal part of steps discussed for boosting the sector.

To boost the infrastructure sector, the government plans to bring the hospitality and tourism sectors under the definition of infrastructure.

The proposal came up at a high-level meeting called by the prime minister’s office to discuss inter-ministerial issues associated with the infrastructure sector and analysis of the target completion in various areas.

A senior government official told Business Standard a number of recommendations had come for the inclusion of hospitality and tourism under infrastructure and considering the potential of growth in these two sectors, the proposal was now slated to be discussed at various levels before a final decision.

The government has recently notified 25 areas as infrastructure across transport, energy, drinking water and sanitation, irrigation, communication and storage — setting right a policy anomaly that gave incentives to the core sector but never defined it.

The sectors will be eligible for tax incentives, viability gap funding and will be covered by a regulatory framework for the infrastructure sector including levy of user charges.

At present, the areas constituting infrastructure takes into consideration different criteria including legacy assets such as roads and railways, high sunk costs, public goods nature, non-tradability of output and risk-prone nature.

The inclusion of hospitality and tourism under infrastructure will help these two sectors in generating funds for projects.

Considering the growth potential, the working group of tourism, set up by the Planning Commission, has recommended a four-fold increase in the allotment of funds for tourism during the 12th Five-Year Plan, beginning April 2012.

Allocation for tourism is likely to be raised in the 12th Plan to Rs 21,500 crore from Rs 5,156 crore during the current Plan.

A substantial proportion of the outlay is proposed to be allocated for improving the tourism infrastructure, human resource development, capacity building and promotion and publicity.

The number of foreign tourists’ arrival by the end of the 12th Plan is estimated at 11.24 million. The minister said the number of domestic tourists by the end of the 12th Plan is projected to be 1,451.46 million. The total number of jobs in the tourism sector is likely to be 77.5 million in 2016, as compared to 53 million in 2010.