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Industry sees middle-class empowerment as tourism growth propeller

  • 05 February 2019

The Interim Union Budget of India for the year 2019, presented by the acting Finance Minster Piyush Goyal, did not have much for the tourism industry to go gung-ho over it. But, the budget has various elements which in a way will play a key role in the development of the tourism sector. This interim budget had many announcements which will further empower the middle class population of the nation, which will further trigger tourism growth.

KJ Alphons, Union Minister for Tourism (I/C), Govt. Of India praised the Budget saying, “It is trailer for much bigger things to come". He further added, “I think it is a fantastic budget for a seemingly large number of people - the middle class, the lower middle class. I think this government has delivered more for the poor of this country than in the past 65 years. This is an incredible budget but this is only an interim budget. This is only a trailer for much bigger things to come. But look at the vision that the Prime Minister and the government has put before the country.”

The Government has announced various tax exemptions which would lead to savings, which according to industry leaders will convert into travelling budget for the people.

Peter Kerkar, Group CEO, Cox & Kings said, “The move by the government to increase the tax exemptions will lead to additional savings thereby leading to more discretionary spends and travel and tourism can be one of the beneficiaries. The overall emphasis on improving rural connectivity with an outlay of Rs. 190 billion will lead to easier access to key tourism destinations which are located in rural and semi-rural areas. Furthermore, the government’s continued emphasis on the North East by allocating additional resources to the region will dramatically improve the connectivity and give a boost to tourism.”

Echoing similar opinion Aloke Bajpai, CEO & co-founder, ixigo added, “Tax breaks for the middle class will result in increased disposable income triggering an increase in travel and tourism spends. The proposed Rs.1448 crore for tourism infrastructure development will propel India's growth impetus as the fastest growing travel market in the world.”

Even hoteliers are banking upon the same strategy to attract the middle class segment even more. Also, the announcements on boosting of infrastructure will surely create more private investors to look at India market.

Speaking about the hospitality segment, Chander Baljee, Managing Director, Royal Orchid Hotels said, “The interim budget focused on overall growth of the country. The exemption of income tax for middle and lower class segment of the society will increase the disposable income, which inline will trigger demand across consumer focused industries. At Royal Orchid Hotels, we are focused on expanding our footprint all over India. The continuous and steady growth in infrastructure will help boost travel among the masses thus increasing the business for hospitality and tourism sector.”

Further speaking about the accommodation development J.B Singh, President and CEO, InterGlobe Hotels said, “The union budget has a positive ring to it and lays down the roadmap for robust growth. 100th airport opening in India, number of flyers which has doubled in the last five years and 27 km of roadways being built everyday (the fastest in the world) have all meant that more and more people are travelling than ever before and thus the demand for quality accommodation which is on the rise.“

According to Ritesh Agarwal, Founder & Group CEO, OYO Hotels & Homes, “This Budget makes a strong promise to the people to India, which I hope will be backed by an equally strong delivery, especially in the areas of job creation and addressing the skill-talent gap. The announced tax breaks, together with low average inflation, are likely to spur domestic demand and spending, and inject liquidity in the market. This is great news for sectors such as hospitality and travel. The announcements on bridging the digital divide and improving efficiency through technology are also welcome.”

For the aviation sector, the Government announced the opening of 100 plus airports and further infrastructure development. Connectivity will further boost tourism to even more Tier II and III cities.

Vijay Dewan, Chairman of Tourism Subcommittee, CII, Eastern Region and Managing Director, Apeejay Surrendra Park Hotels said, “We saw a strong focus on the strengthening of rail and road infrastructure. While the building of 100 plus airports across India is a great step forward, the government should have also considered bringing Aviation Turbine Fuel (ATF) under GST. This would make the aviation industry more viable. For the tourism industry to be competitive especially with the Far East countries, the GST for hotels with tariffs of INR 7,500 and above should have been capped at 12 per cent.”

Speaking about the Budget, Dr. Ankur Bhatia, Executive Director Bird Group & Member of CII’s Core Committee on Aviation said, “This budget while announcing financial sops for MSME’s, farm and health sectors that form the backbone of the economy and tax relief for the middle class, also sufficiently prioritised infrastructure for railways and airports by allocating hefty investment to add fillip to ongoing progress. For airlines, the business has grown exponentially in the last year as UDAN Yojana has made travel possible for anybody and everybody. This has put an unexpected burden on airports severely crowding them. There is an urgent need to upscale existing airports and introduce the stipulated 100-mark operational airports soon, to cater to an ever-increasing demand.”

The initiative to develop connectivity and especially the North Eastern region will further stimulate the domestic and inbound tourism market. Rakshit Desai, Managing Director, FCM Travel Solutions said, “The interim budget announced promising initiatives that will definitely augur well for the Indian Travel & Tourism industry. Initiatives such as UDAAN, Eastern Peripheral Highway and several other measures will boost not just domestic travel but also augment inbound tourism. For example, increased connectivity in the North-Eastern region of India, through rail, road and air (owing to projects such as UDAAN and Bogibeel Bridge) and further proposed allocation of INR 58,166 crore will provide much needed impetus to travel and tourism in the region.”

Despite infrastructure development announcements, the Government has not taken any step in reviving the Indian MRO industry. Speaking about the MRO industry, Bharat Malkani, President, MRO Association of India (MAOI) said, “The year 2018-19 was already going downhill for the Indian MRO industry and with no plans or actions to revive it; the budget has spelled its death knell. We can’t even begin to explain how adversely this is going to affect the sector. Within the year an additional 30 per cent MRO companies will shut down leading to unemployment, loss of revenues to the Government, and higher levels of imports leading to massive outflows of hard earned ForEx. Indian MRO players will have to look for alternative professions or industries to carry on with their lives.”

Expressing his view on the digital infrastructure development Shikhar Aggarwal, JMD, BLS International added, “The interim budget appears balanced and forward-looking. The focus on creating digital infrastructure in villages and expanding common service centers to digitally deliver services to citizens is a very positive move. My own company is amongst the pioneers in this area and we know how it can help increase efficiencies for Citizens as well as for Government officials, while also creating employment in the local eco-system. Artificial Intelligence and machine learning are becoming increasingly important for business and setting up of the national center for artificial intelligence along with the development of the national AI portal are very welcome. It will further improve the ability to handle large data efficiently and with greater data security.”

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