Rhetoric & Reality :Union Budget 2019

The ‘no-relief on GST’ stance taken by the government and the failure to recognise hospitality as crucial to India’s growth story continues to be stumbling blocks

Union Finance Minister Nirmala Sitharaman presented her first budget on July 5, post the formation of the new government in June this year. While the budget has garnered mixed reactions across all the industries, it has also laid a roadmap for India, which is aspiring to be a $5trillion economy. The budget has focussed attention on the digital economy, start-ups, banking reforms and infrastructure development. For the hospitality and tourism sectors, the government has promised the development of 17 iconic tourist sites as world-class tourist centres, which will offer further growth impetus to the two. However, the failure to bring down GST for the hospitality segment could prove to be a dampener. Market leaders and industry experts share their perspective on the hits and misses.

Aditi Balbir, founder and ceo, V Resorts

Hospitality and tourism industries

These sectors can prove to be game-changers for the Indian economy and society. We are expecting more schemes and policies for the travel and tourism sectors. The attention paid by our honourable Finance Minister, Nirmala Sitharaman on better connectivity to different tourist destinations and enhanced facilities and experiences for travellers will help the tourism industry. The focus should also on the gaps in a skilled workforce, which can be fulfilled by starting skill development programmes.

The development of 17 iconic tourist sites as world-class centres by the government comes as great news for the hospitality and tourism segments. This policy will not just attract more tourists but also generate better job opportunities. The budget has emphasized the promotion of the rich tribal heritage of India. Policies to promote tribal arts, crafts and fashion on a global platform will help us grow. This move might put us on the world map and generate revenue for the tribal sections of our society.


Women entrepreneurs

As per Sitharaman, rural India has seen an exponential growth curve when it comes to the employment rate in rural areas since 2017. A great scheme for women entrepreneurs, Naari tu Narayani has been introduced by the government. I strongly believe that this budget holds a promising future for the women of India. Moreover, under the Mudra Scheme, women will get a loan benefit of Rs 1 lakh for their entrepreneurial aspirations. This is an excellent initiative and will help in the evolution of women leaders in different sectors, and not just in tourism and hospitality. This #BudgetForNewIndia looks promising as it will offer equal rights and opportunities to women.

Vineet Verma, executive director & ceo, Brigade Hospitality Services Limited

The budget was quite progressive, policy-driven and should deliver positive results in the long term. However, we are disappointed to see that the tourism and hospitality sectors were largely ignored. We are still hopeful that the GST council will review and bring down GST for hotels from the present 28 to at least 18 per cent. Ajay Bakaya, managing director, Sarovar Hotels and Resorts The Union Budget 2019 was neutral and disappointing. The good part: The government is creating better infrastructure such as roads, railways, airports, waterways and sanitation. This will lead to growth and attract more foreign tourists, stemming the flow of opportunities presented by lavish weddings and other events from India to other countries. The budget talked about developing 17 iconic tourism sites, which will benefit the tourism industry and create new demand for hotels and other tourist-related infrastructure, which I consider a good step in the long run. The investment allotted towards infrastructure, national highways and the Bharatmala project (centrally funded roads and highway project) will increase the efficiency of commuting, benefiting the sector in the future.

The low point of the budget is the failure to recognise the hospitality industry as a key growth driver and one of the biggest employment generators. Rationalization of various GST rates is one of the demands of the hospitality/tourism sectors. Tax reforms or a single rate GST structure would boost investment and increase demand for hotels. By streamlining changes in tax policy, we will take away the lush 28 per cent penalty on so-called luxury. INR 7500/room per day (USD 110) is no benchmark for luxury in India or anywhere in the world. Good mid-market hotels are losing out. If India has to grow and expand to a larger share in world tourism, the desired impetus needs to be given to the segment through investment benefits and rational GST approach.

Ajay Bakaya, managing director, Sarovar Hotels and Resorts

The Union Budget 2019 was neutral and disappointing. The good part: The government is creating better infrastructure such as roads, railways, airports, waterways and sanitation. This will lead to growth and attract more foreign tourists, stemming the flow of opportunities presented by lavish weddings and other events from India to other countries. The budget talked about developing 17 iconic tourism sites, which will benefit the tourism industry and create new demand for hotels and other tourist-related infrastructure, which I consider a good step in the long run. The investment allotted towards infrastructure, national highways and the Bharatmala project (centrally funded roads and highway project) will increase the efficiency of commuting, benefiting the sector in the future. The low point of the budget is the failure to recognise the hospitality industry as a key growth driver and one of the biggest employment generators. Rationalization of various GST rates is one of the demands of the hospitality/tourism sectors. Tax reforms or a single rate GST structure would boost investment and increase demand for hotels. By streamlining changes in tax policy, we will take away the lush 28 per cent penalty on so-called luxury. INR 7500/room per day (USD 110) is no benchmark for luxury in India or anywhere in the world. Good mid-market hotels are losing out. If India has to grow and expand to a larger share in world tourism, the desired impetus needs to be given to the segment through investment benefits and rational GST approach.

Prashanth Aroor, ceo, IntelliStay Hotels Private Limited

As a citizen, the budget has, to an extent, met my expectations, but it lacks long-term direction. As a hotelier, not quite the budget we would have hoped for. A lot remains to be done to provide impetus to an industry that contributes an almost double-digit share to the GDP and employment numbers. The budget needed a more long-term plan and direction. The GST slabs on hotels make us less competitive as a destination. We have to stop treating all hotels with one brush as if it’s a sin Industry. This hurts the growth of one of the most investmenteffective employment generators at the bottom of the pyramid.
Tourism drives so many businesses across an economy at multiple levels and entire countries survive in it.

Tourism/hospitality and amusement need to be designated as preferred sectors, akin to infrastructure projects. They have long payback and need appropriate credit and benefits, without which capacity addition has slowed down drastically. The government spending on infrastructure will set a template, but private parties are not going to be able to take it to definite outcomes for the economy. The super tax will have farreaching effects on multiple HNIs and fund invested businesses and economic/social programs. It will hurt private investment. To grow the segment, the government should give hospitality infrastructure status and rationalise taxes. The government has put policies in place for tourism only development zones with transparent equal opportunity.

It needs to now reward training and skilling initiatives and investments, create a national tourism minimum charter that all states need to subscribe to, get marketing support from the centre, and protect hotels from arbitrary state action on populist liquor policies.


Aditya Ghosh, ceo - India & South Asia, OYO Hotels & Homes 

The budget breaks away from tradition and nudges the public and policymakers to think outside the brown briefcase. It sets a vision for the next decade for India, with an intent to bridge the socio-economic and urban-rural divide. The boost to infrastructure, labour reforms, access to capital and talent for start-ups and MSMEs alike will drive productivity and consumption, which is also good news for the hospitality, travel and tourism industries. The real test of this vision, however, will lie in its realisation, which is essential to deliver on the government’s mandate of providing ease of living and ease of doing business. This will be possible only through concerted efforts from all stakeholders.

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