The Budget 2017, announced by Finance Minister Arun Jaitley, has outlined several developments and plans for the tourism sector. Jaitley referred to tourism as a big employment generator and has announced that the government will set up five special tourism zones in co-ordination with state governments, alongside launching the Incredible India campaign on international level.
This is the first instance of the Railway Budget being integrated into the Union Budget. The merger of the Railway Budget with the general budget will give an impetus to the transport sector’s growth, opined PM Narendra Modi.
On tourism and related infrastructure front, the budget saw several announcements for railways, aviation, road and coastal connectivity.
Selected airports in Tier II cities have been identified for taking up operations and development under PPP model. However, the minister hasn’t revealed specific details on the same. The focus of railways for the 2017-2018 fiscal will be on passenger safety, capital works and cleanliness, among other issues such as infrastructure upgradation and provisions for passengers. The railways will also take steps for launching dedicated trains for tourism and pilgrimage purposes.
In this direction, Indian Railway Catering and Tourism Corporation (IRCTC) had announced last month it will launch the first pilgrim train for the North East region on February 17, which will connect to destinations like Jagannath and Konark temples.
In another highlight of the budget, promoting the government’s digital initiatives, service charge on e-tickets booked through IRCTC has been withdrawn. The government also removed all duties on devices used in the process of cashless transactions like point of sales machines, finger print readers etc.
A total of Rs 1.3 lakh crore has been allotted for solar powered and disabled-friendly railway stations. By 2019, all coaches of Indian Railways will be fitted with bio-toilets. Rail safety fund with a corpus of Rs 100,000 crore will be created over a period of five years. Jaitley has announced a total of Rs 55,000 crore for railways in Budget 2017. Whereas, the transport sector in genaral has been allocated Rs 2.41 lakh crore.
A new metro rail policy will be announced, which is expected to open up new jobs for the youth. Additionally, railway-related state-run companies like IRCON and IRCTC will be listed on stock exchanges.
Budget allocation for highways has been stepped up to Rs 64,000 crore in FY18 from Rs 57,676 crore.
In another traveller-oriented move apart from tourism and pilgrimage trains, Head Post Offices will now be used as the front office for passport services, eliminating the need to travel long distances for obtaining a passport.
The government has also allocated Rs 1,840.77 crore to the tourism ministry for the next fiscal, including Rs 959.91 crore for the integrated development of tourist circuits.
National carrier Air India, which is surviving on Rs 30,231-crore bailout package extended by the previous UPA government, will receive Rs 1,800 crore as equity infusion in 2017-2018 under the government’s ongoing financial assistance.
Industry speak
“One of the key wins of this budget has been the announcement to launch the Incredible India 2.0 campaign. We would eagerly await the formal plans and rollout of this much-awaited campaign. There is a huge market for cruises that India is missing out. The 2,000-km of coastal connectivity roads identified for construction and development in this budget will facilitate better connectivity. The intent to skill India with various government programmes will definitely help to reduce the skill shortage in the tourism Industry. The budget gives a big fillip to the Regional Connectivity Scheme (RCS). It proposes no service tax on the amount of viability gap funding (VGF) payable to the airline operator for providing the services of transporting passengers from airports identified under the RCS Scheme for one year. But to our understanding, the demand and supply to these smaller destinations needs to mature over a period of time, there is a gestation period; a longer deferment of tax collection may have helped.”
– Sunder G Advani, vice chairman, World Travel & Tourism Council, India Initiative (WTTCII) and CMD, Advani Hotels & Resorts (India)
“Significant emphasis on augmenting transport infrastructure and railway safety and convenience would have positive impact. However, these measures are incremental in nature, and are expected to provide only a moderate boost. Nonetheless, reduction in taxes levied on small and medium businesses is likely to provide some comfort factor to the sector, which is currently adversely affected by a relatively high taxation in comparison with other tourism-focused countries. Further, proposed relaxation in labour laws is also likely to provide relief to the labour-intensive sector. In conclusion, the tourism and hospitality sector would need greater support from the government to thrive in an increasingly competitive domestic as well as international markets.”
– Jaideep Ghosh, partner and head – tourism and hospitality, KPMG India
“This budget has very little to offer to the tourism industry, but with plans to launch Incredible India 2.0 as the next phase of growth for domestic tourism with respect to India, there is something to look forward to. India has a vast railway network and the recently announced Railway Budget acknowledges the strength of this. One of the biggest announcements is the withdrawal of service charge on rail tickets booked through IRCTC. This will not only lead to more bookings but will enable the consolidation of a digital economy. Another significant development is the emphasis on safety and sanitation, by introducing bio-toilets, which will increase passenger comfort.”
– Mahesh Iyer, COO, Thomas Cook India
“Involvement of private sector in airports is likely to bring efficiency gains, making such airports more profitable. AAI too is likely to participate in the airport development, supported by funds raised by monetising its land bank. While private sector has been involved in airport infrastructure development under the PPP model, their interest has been restricted to major airports. This is on account of low revenue generation potential of other airports. The budget proposals look to encourage both the private players and AAI for airport development. It is noteworthy that the passenger traffic is poised to cross 250 million in FY2017, which makes continued investment in airport infrastructure a key imperative.”
– Harsh Jagnani, sector head and VP, corporate ratings, ICRA
“Services constitute 65 per cent of the GDP, but there’s lack of clarity on the taxing of services under GST, which is crucial.”
– Ashwini Kakkar, executive vice-chairman, Mercury Travels
“This budget would help to boost the rural infrastructure and industrial sectors. Series of initiatives on digital payment is expected to bring efficiency in the collection and is positive for the formal sector. The ban on cash transaction over Rs 3 lakhs is a welcome move and it is expected to provide a level playing field. Focus on railway security and upgradation of services is expected to give boost to rail tourism.”
– Vishal Suri, MD, SOTC Travel
“Road and rail infrastructure are crucial in terms of boosting tourism as these are widely used mode of transport in India. In this context, stepping up the allocation for national highways to Rs 64,000 crore, announcement to launch dedicated trains for pilgrimage and tourism and service charge withdrawal on booking of rail tickets are welcoming moves which will help to accelerate domestic and inbound travel. We are quite positive about the focus on rural infrastructure development as we see a scope to promote rural tourism even further, especially for inbound tourists. However, we need to know more about what all will be covered in five special tourism zones to be set up in partnership with states.”
– Peter Kerkar, director, Cox & Kings
“The budget continued to build on the government’s transformational and reform-focused direction to energise the Indian economy. The sustained focus on infrastructure development and modernisation will be key to cater to the needs of this industry especially – both domestic as well as foreign tourists. Further, the five special tourism zones to be developed in partnership with states and better rural infrastructure could augment emerging trends like rural/ experiential tourism.”
– Simon Fiquet, general manager, South East Asia and India, Expedia
“The tourism industry welcomes this budget. We see substancial increase in budget allocation for the travel and tourism industry. The finance minister also said that exports are not increasing. I would like to highlight that tourism can play a crucial role to improve this situation. Also, the budget allocation for commerce sector – which contributes to an important amount of our business – has been reduced, but we will hold discussions with the government in the future.”
– Sarabjeet Singh, vice chairman, Federation of Associations of Indian Tourism & Hospitality (FAITH)
“The industry contributes close to 7.5 per cent of India’s GDP and has been a key contributor to the Indian economy. With an objective to clearly give a further impetus to both domestic and inbound tourism, we feel the strategic vision for the Incredible India 2.0 campaign is a positive step. This kind of support from the government goes a long way in creating awareness and should further help India get a distinct competitive edge vis-à-vis other destinations.”
– Rakshit Desai, managing director, FCM Travel Solutions
“The government has already put in efforts on air connectivity in these cities. This is a welcome move from the government. Today’s announcement will give impetus to travel and tourism in these markets. This will also provide better airport infrastructure such as bigger parking spaces for aircraft, like in metro cities.”
– Harmandeep Singh Anand, managing director, Jagsons Travels
“The budget brings multifarious opportunities for the tourism sector. Establishment of five special tourism zones in partnership with the states will attract more foreign travellers and grow the inbound travel. Also, the government’s demonetisation drive has given a tremendous fillip to digitalisation in India. Focus on digital economy will be a significant factor for the development of visa outsourcing industry. It will help to maximise reach and increase the demand for inbound as well as outbound travel.”
– Shikhar Aggarwal, joint MD, BLS International
