Union Budget 2023-24: Expectations high for the hospitality industry

The hospitality industry in India, is a multi-billion diverse sector that depends heavily on leisure and disposable income and attracts global attention. India has experienced a heavy influx of foreign visitors since the early 2000’s, which is contributed in India, ranking one of the top ten largest tourism economies globally. The sector was marred by the pandemic, but is now seeing the sunrise and has massive potential for growth in the near future. The Union budget 2023-2024, the Indian hospitality sector is expecting fresh and new amendments that will lower taxes and create monitored mechanisms for interest-free loans and easy availability of finance to small and medium sized enterprises. An overview and prospects of hospitality industry in India The hospitality sector in India is one of the most profitable sector that accounts for more than 8 % of the country’s workforce and an estimates of creating more than 15 million jobs in the past few years. The hospitality industry across major cities in India, saw a significant growth in 2021, after the onset of Covid-19. The hospitality industry is expected to attain a total value of 1000 billion INR by the end of 2022, and a CAGR of nearly 5% was observed during the 2018-2021 period. Along with leisure travel, the growth can be attributed to revenues from the corporate travel, rise of staycations, weekend getaways and social gatherings that began to plummet after Covid-19. Hospitality industry expectations from budget 2023-2024 The announcement of the Union Budget, 2023 is around the corner by the Finance Minister, Nirmala Sitharaman and the recovering high-growth sector is riding on high hopes. Although the industry is recovering after the magnamity of the pandemic, and is plunging towards growth, a lot of major players are still reeling under losses and as the Budget session draws closer, stakeholders and industry professionals have expectations. The Indian hotel industry is said to hit over Rs 1.3 trillion in revenue in FY 2020-2021. The Emergency Credit Line Guarantee Scheme (ECLGS) was introduced as part of reducing financial burden on hospitality sector, as a relief package and approved an additional 50,000 crore from 2022 up to March 2023. By maximizing the term of ECLGS loan, and a longer repayment schedule, the industry will slowly recover. The Federation of Hotel and Restaurants association of India (FHRAI), is expecting an 18 percent tax category to come under 12 percent. The other important recommendation is giving the hospitality industry infrastructure status and classifying hospitality under RBI infrastructure by lending a norm criteria for access to long-term funds that will improve the supply of high-quality hospitality accommodations and stimulate greater domestic and international demand for travel. Rationalization of the Goods and Services Act (GST) and a central single window clearance for hotel budgets is another major expectation from the Budget in 2023. The GST council in 2019 had reduced the rates on hotel tariffs, and hotel rooms with a tariff of 7500 and above, attracted  a GST of 18 percent instead of 28 percent and the rooms with tariffs between Rs 10001 and Rs 7500 are levied a tax of 12 percent. The 18% GST for rooms that cost 7500 and above should be revised to attract more guests. The other important recommendation to fast-track investments in the industry, is reducing the complex documentation and array of licences required to establish a centralized approval system for licences and permits. Reducing the wait time and approval within a pre-defined timeframe will help in establishing an efficient and hassle-free system. The industry is also looking for robust incentives in UPI backed digital payments, that will promote economical and user-friendly digital payments solutions and enable to deepen the reach of digital payments across the country and all segments of population. Rural tourism is gaining popularity, with a spike in sentimental values that have increased post-pandemic. Sustainable human development will help poverty alleviation, employment generation, environmental regeneration and the advancement of disadvantaged groups. The government can play a crucial role by planning proper land use, favorable economic legislations and support the local economy to make rural areas favorable for foreign direct investment. The hospitality industry has seen less highs and more lows, since the last few years and can resurge with an accelerated growth momentum that will be documented in Budget 2023-24. The author is CEO and Co-founder of Ekostay, a homestay venture. Views expressed are personal Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.