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Sitharaman press conference: What will FM announce for tourism, hospitality, aviation sectors?

Nirmala Sitharaman press conference: While each of these sectors has made specific demands, some of the common demands include tax holiday, GST (goods and services tax) holiday and payment of salaries to the employees by the government

twitter-logoManu Kaushik | May 15, 2020 | Updated 15:24 IST
Sitharaman press conference: What will FM announce for tourism, hospitality, aviation sectors?
Nirmala Sitharaman conference: Third tranche of economic stimulus

On the third day of announcing the economic package, finance minister Nirmala Sitharaman is likely to come out with stimulus for the ailing travel, tourism and aviation sectors. One of the worst-hit sectors in the current lockdown, companies engaged in travel & tourism, restaurants and aviation sectors have been asking for a bailout from the government over the past 45 days.

While each of these sectors has made specific demands, some of the common demands include tax holiday, GST (goods and services tax) holiday and payment of salaries to the employees by the government. Akshay Kumar, vice chairman of industry body FAITH (Federation of Associations in Indian Tourism & Hospitality), says their association has made presentations to the finance ministry, NITI Aayog, and the tourism ministry, and the demands have reached all the way up to the prime minister's office. "We have made about 30 demands in our presentations. Though we haven't heard anything from the government, we have kept our fingers crossed," Kumar says.

Also read: Coronavirus live updates: Lockdown 4.0! Delhi reports 472 new cases in 1 day; India's COVID-19 tally-81,970

Broadly, the tourism sector accounts for 10 per cent of the GDP, and gives employment to 3.8 crore people directly and indirectly. Here's a list of demands from them.

TRAVEL & TOURISM

As per industry body CII (Confederation of Indian Industry), India may lose more than 20 million jobs in travel and tourism sector as a result of coronavirus outbreak, and the ongoing lockdown. Hospitality is the backbone of the travel and tourism sector. The hospitality sector alone generates annual revenues of $23 billion across 1,40,000 branded and 2.6 million independent hotel rooms.

One of the topmost demands of the travel and tourism sector is to get 3-6 months additional moratorium (on top of RBI's three months moratorium) on all working capital principal, interest payments on loans and overdrafts. This will help in providing liquidity to the businesses, and to save them from becoming NPAs.

In addition, the sector has also asked for short term, interest-free loans for rebuilding business and immediate transmission to all industry segments such as hotels, tour operators, travel agents (online and offline). Besides, there's a demand for the deferment of all statutory dues such as GST, advance tax payments, provident fund, ESIC, and customs duties for at least twelve months.

Also read: Nirmala Sitharaman press conference: Income Tax returns due date extended to Nov 30

RESTAURANTS

Though the restaurants sector has been partially relieved with the day one announcements for the MSME sector, but the sector participants think that there's scope for more relief, especially direct benefits for the employees in the sector.

Restaurants association NRAI has classified its demands into three areas: people, operating issues and policy initiatives. On the people side, the recommendation is to provide unemployment pay cover to all employees (covered under the ESIC Act) in full till lockdown and 50 per cent post that till March 2021. It can be a mix of cash and free food grains. The other major demand on the people side is extending moratorium on retail loans by employees to help them with their cash flows.

On the operating issues' side, the industry has been asking for complete waiver of all license fees and minimum rent for utilities for six months. In addition, there's demand to postpone the renewals of licenses, permits and registrations.

On the policy front, the industry has asked for immediate restoration of input tax credit on GST. This is long-standing demand of the industry though. After the government reduced the GST rates from 18 per cent to 5 per cent, the input tax component was removed. This has resulted in higher operating costs for the restaurants.

As per dining out and online table reservation tech platform Dineout, the F&B sector contributes around 3 per cent to the GDP, and employs some 7.3 million people. With the coronavirus pandemic, nearly 30 per cent of those employed are at risk of losing jobs, and the monetary loss could be as high as Rs 1 lakh crore.

Also read: FM Nirmala Sitharaman says Rs 18,253 crore disbursed under PM-KISAN scheme during lockdown

AVIATION

The most severely hit domestic aviation sector is estimated to be losing Rs 75-90 crore per day due to the lockdown. The already-fragile domestic sector is not equipped to deal with a shock of this magnitude, and hence, need urgent intervention from the government.

While it might be too much to ask from the government but most sector experts believe that just one package would not be enough to revive the sector. "There's a need for serious handholding from the government at the moment," says an aviation consultant.

The demand from the aviation sector is two-fold: emergency relief followed by a thorough revival package to bring the sector back on its feet. In the emergency phase, the sector is asking for six-month moratorium on working capital loans taken by the airlines. Plus, it also seeks an immediate cash infusion to support part-payment of salaries up to a certain grade for 6 months in addition to moratorium of outstanding payments like airport charges, ATF (aviation turbine fuel), GST and other payments.

While airlines like IndiGo has paid full salaries for March and April, it has already announced plans to trim salaries for May. Its rivals SpiceJet, GoAir and Vistara have either slashed salaries or have sent a large number of staff on furlough.

In the long-run, the airlines are asking to bring ATF under the GST framework, credit lines from banks to support the revival, and direct cash injection in the form of grants if the lockdown gets prolonged.

Also read: Coronavirus relief tranche II to cost govt Rs 14,750 cr; fiscal dent of 0.07%: SBI Ecowrap

Also read: Agri package doesn't cover even one-fourth of small farmers; non-institutional lending still prevalent

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