Budget: There was room for more direct support, says hospitality industry

The government has extended the ECLGS up to March 2023 and earmarked an additional Rs 50,000 cr for hospitality and related sectors

The hotel and industry associations said the extension of Emergency Credit Line Guarantee Scheme (ECLGS) is a welcome move and indicates that the government has acknowledged the distress in the hospitality and tourism sector. However, they expressed dissatisfaction over the extent of the support pointing out there was room to do more for a sector that has been severely battered by the three waves of the pandemic.  

The apex bodies have been engaged in hectic parleys with various government functionaries for relief for the last two years. As a run up to the budget, it also sent letters to the Prime Minister and Finance Minister.

The government has extended the ECLGS up to March 2023 and earmarked an additional Rs 50,000 crore for hospitality and related sectors, Finance Minister Nirmala Sitharaman said in her Budget speech on Tuesday

"It’s just a drop in the ocean for a sector,” said Federation of Hotel & Restaurant Associations of India (FHRAI). The whole tourism travel and hospitality industry “is feeling quite dejected”, said Nakul Anand, chairman FAITH (Federation of Associations in Indian Tourism & Hospitality.

“The union budget provides some relief and medium to long term infrastructure measures to the stressed tourism travel and hospitality industry but there was an immediate opportunity for more direct intervention to support the highly stressed tourism travel and hospitality companies and their employees,” said Anand.

The support, he suggested, could have come in the form of wage support for employees of tourism travel and hospitality companies till tourism revival happens, abolishment of TCS on outbound travel, infrastructure status to hotels. E-visa fees waiver for all tourist visas till inbound revival kicks in, domestic income tax travel credit for Indian citizens and Indian companies, export status for tourism export earnings would have also helped. The government could have also extended support by a global bidding fund for Indian mice companies and setting up of a GST review committee to re-examine the pain points of the tourism, travel hospitality sector, he said.  

Hotel Association of India (HAI) said the measure will offer some relief. HAI has been requesting for the scheme to be customised and tailored to the unique model of hotel business and the future outlook of the sector,” said KB Kachru, vice president, HAI.

The number of meetings we held with the Finance Ministry and other ministries led us to believe that they were surely going to announce some sort of specific relief for the industry but it is a huge disappointment that it has not come through.

Gurbaxish Singh Kohli, vice president, FHRAI said the number of meetings it has had with the Finance Ministry and other ministries led the apex body to believe that the government was surely going to announce some sort of specific relief for the industry. “But it is a huge disappointment that it has not come through."

Among other things, the industry has been requesting long-term credit facilities in view of the vulnerabilities and the time it would take for businesses to resume normalcy, he said.

“The hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business,” said Sitharaman in her speech. Considering these aspects, the ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by Rs 50,000 crore to total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises. 

Sanjay Sethi, chief executive officer and managing director at Chalet Hotels said the industry will await fine print on the relaxations on meeting debt ratio covenants of previous ECLGS schemes, if any, and if the Rs 200-crore cap under the scheme has been enhanced.

“We are also very pleased to hear the Finance Minister’s focus on the environment, sustainability, solar power and electric vehicles. The focus given to prioritize clean mobility and green energy in the current budget is aligned with the initiatives and actions undertaken at Chalet Hotels,” said Sethi.