Budget Impact on Hospitality Sector

At the union budget 2017, Arun Jaitley, the Union Finance Minister highlighted the importance of tourism and hospitality sector as a major employment generator. The tourism industry had some takeaways but the long pending demands of conferring the industry status and reducing tax burden had no response.

The Federation of Associations in Indian Tourism & Hospitality (FAITH) had suggested the “Holiday in India”, however, it did not make it to the final list. The final list had the five new special tourism zones. The budget also announced the launch of “Incredible India- II” across the world. It would promote India as a major tourism destination. The infrastructure advancements that are planned according to this budget will also help in increasing the growth rate of the tourism industry. The railroad infrastructure along with the announcement regarding the airports in tier-II cities will be very helpful.

The Incredible India- II campaign will result in greater tourist result and demand from the overseas. This will create huge demand & opportunity for the tourism and hospitality sector. This will encourage travelers and promote digitalization as well. Private companies have been given the consent to manage and operate airports smaller towns and cities under public-private partnerships.

The entire tourism and hospitality sector had very high expectations from this year’s union budget. The industry was looking forward to receiving the much-needed reduction in taxation. Also, the industry hoped that the government would grant infrastructure status to hotels. But, there was nothing regarding this.

The hospitality industry got 5% tax reduction, which is applicable for all MSMEs.  The reduction in corporate taxes aimed at SMEs will also benefit the independent hoteliers and hospitality service provider. The listing of IRCTC on the stock market will also contribute to the growth of the Indian tourism sector.

The travel and tourism industry were a bit disappointed that the Government did not announce any package, incentive for the sector. However, considering the overall announcements, the announcements will enable the hospitality and tourism sectors collectively to serve the increased inflow of tourists.

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