General budget 2018 ushers unprecedented infra push, bodes well for tourism

The last budget before the general elections in 2019 is out. Among its several components, primarily focussed on agriculture and allied activities, it has several positives for travel and tourism in the country.

In an unprecedented move aimed at infrastructure augmentation and last-mile connectivity, the government has given a massive push to asset creation. Finance minister Arun Jaitly made a specific mention of the need for muscling up SMART Cities and AMRUT and proposed earmarking a substantial sum of over INR 2.02 lakh crores for 99 out of 100 SMART Cities for the same. “Infrastructure is the growth driver of the economy,” finance minister said, adding that India needed investment in tune of 50 lakh crores (7.8 trillion USD) to create requisite land, port, inland waterways, rail, and sea connectivity within the country. With an eye on filling in the gaps, “an all-time high allocation of fund for the rail and road sector” had been proposed, he further added.

In terms of specifics, 4000 kilometres of new rail track, besides converting 18000 kilometres of rail track in to broad gauge from meter gauge has been mooted. In a bid to ensure passenger comfort, all railway stations with footfalls greater than 25,000 across the country would be equipped with escalators.

 Also, construction of 9000 kilometres of national highways has been undertaken. “Bharatmala project has been started to bring about seamless connectivity by creating 35,000 kilometres of road network in the first phase,” Arun Jaitly detailed. The cost to the exchequer for the same stands at a whopping INR 5.35 lakh crore.

He noted that creating these “key linkages” were crucial in developing connectivity to border areas and boosting tourism. “Rohtang Pass has been made accessible through out the year with the tunnel getting operationalised,” he said, adding that the government was going to construct a tunnel in Sela Pass in Arunachal Pradesh to promote tourism in the northeast region.

Making a direct mention of tourism, finance minister suggested that the government was keen on giving a fillip to sea-plane activities. Also, HRIDAY (Heritage City Development and Augmentation Yojana) scheme had turned out to be an extremely positive initiative for the government and buoyed by the development, the government has proposed to develop ten tourist sites in to “iconic tourist destinations”, Jaitly added.

On the aviation front, focus on harnessing regional connectivity is expected to continue unabated. 56 unserved airports were going to be connected through UDAN scheme (Ude Desh Ka Aam Nagrik), the minister informed, adding that the government was planning on increasing airport capacity by 5 times to address the issue of chocking airport infrastructure in key aviation hubs of the country, and aiming at generating “one billion trips per year”. It is important to note that the Airport Authority of India (AAI) has 124 airports under its ambit. However, only a sum of INR 60 crores has been allocated to kickstart the initiative – which may not be enough.

Online travel and technology segment has reason to cheer as well. ‘Digital India’ campaign, launched with much fanfare to enhance internet penetration in the country, is getting more teeth. The government has proposed setting up five lakh Wi-Fi hotspots to provide broadband connection to five crore rural citizens at an estimated cost of 10,000 crores. The annual outlay of Digital India has also been effectively doubled, with the annual budget of over INR 3073 crores for 2018-19.

Amber Dubey
Partner and Head, Aerspace and Defence, KPMG

Reacting on the budget, Amber Dubey, Partner and Head, Aerspace and Defence, KPMG in India noted that it was “encouraging to see the FM talk about increasing airport capacity to handle 1 billion trips per annum from around 180 million currently.”  “KPMG has always believed that India could surprise the world and become the largest aviation market by 2030. It’s fantastic to see that the govt is shifting from short term planning to a long-term vision,” he said. He added that the focus needed to shift to the execution of this “challenging yet achievable vision.” He called government’s focus on improving  infrastructure at leading tourist spots a “positive” step. “This will help grow aviation too,” he reasoned.  

J B Singh
President and CEO of InterGlobe Hotels

J B Singh, President and CEO of InterGlobe hotels lauded the government’s decision of reducing corporate tax rate to 25% for companies under the 250-crore turnover mark, stating that “it will likely increase re-deployment of capital among SMEs” He reasoned that the step should increase travel and further boost hotel and tourism-related growth. He further added that “several initiatives from the infrastructure standpoint will help boost growth and in turn impact tourism positively,” and made a specific mention of improving intra-city train networks in Bangalore and Mumbai as well as completion of close to 9,000 kilometres of national highways.

Peter Kerkar
Group, CEO, Cox & Kings

Peter Kerkar, Group, CEO, Cox & Kings welcomed the government’s move of developing ten prominent tourist sites as iconic tourism destinations, adding that “the move to upgrade tourism amenities at 100 ASI managed monuments will enhance the visitor experience.”  

He said that the overall thrust of the budget was “on infrastructure development”, a core demand of tourism industry to the government. “New tourism circuits can only come up if there was adequate development and this budget lays emphasis on it,” he said.

Pranob Sarkar
President, IATO

IATO chief Pranob Sarkar rued the fact that the government had not conferred export industry status to tourism industry, a long-standing industry demand, to make tourism central to creating wealth and employment. “We have been pleading with the government that our taxes are much higher than our neighbouring countries and we need to be at par to compete in the international markets to attract more foreign tourists, and to create more employment, tourism industry needs to be boosted by giving export industry status. However, this demand has not been met,” he said.   

M Balaji, CEO, Clarks Exotica Convention, Resort & Spa welcomed the decision of expanding airport capacity, noting that “the aim to expand airports capacity by 5 times with about one billion air trips a year was good news for the industry, since it would indirectly boost the hospitality market as well.” 

Besides the evident infra push, there are several other notable inclusions as well. Over 2 crore new toilets have been planned in 2018-19, among others, and it is expected to improve overall health and hygiene in the country, essential for tourism in any form – domestic or international.

Tourism industry is inter-linked to diverse sectors under the sun, and cannot operate in isolation. Its dependence on issues such as infrastructure, cleanliness, connectivity and digital penetration is obvious. The budget brings good news on all these counts. While GST rates remain an area of concern for the larger industry, it being a matter of policy, the issue can be expected to be debated beyond the realm of the general budget as well.

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