Mere lip service, no gains

Jyoti Koul - New Delhi

2006-’07

Though the Finance Minister, P Chidambaram expressed that the Centre has recognised the tourism sector as an employment generator in his budget speech, his actions did not speak louder than his words, industry opined.

Firstly, though there has been an increase in the budgetary allocation towards tourism - Rs 830 crore from Rs 786 crore, it is only an increase of 5.6 per cent over last year's budget. However, looking at a comparative index, the hike in the 2005 - 06 budget from 2004-05 allocation was a whopping 57.2 per cent, which incidentally surpassed all increase in tourism budgetary allocation since 2000. (See Box)

A look at the distribution of the tourism budget outlay highlights a continued focus of the government on promoting India. For tourism information and publicity the allocation has increased from Rs 210 crore last year to Rs 288 crore, with a substantial increase on overseas campaign being Rs 165 crore from Rs 140 crore the previous year. However, there has been a reduction on spend for domestic campaign - Rs 63 crore from Rs 70 crore last year.

Another key focus of MoT will be the development of tourist infrastructure such as tourist bungalows, forest lodges, beach resorts, and the allocation has been increased from Rs 415.75 crore to Rs 422.50.

Speaking on the Budget, the newly appointed tourism minister, Ambika Soni, opined, "The government's objective is to identify tourism sector as an important avenue for employment and income generation, foreign exchange earnings and at the same time having a multiplier effect on the economy with incomes obtainable at the local levels."

Commenting on the fund allocations she said, " The budget allocations may or may not fulfil the requirements of the tourism industry but there is an over all focus on development. I have been demanding infrastructure status for tourism and that has been over looked but I will continue to fight in order to get things done."

However, industry leaders have an indifferent attitude towards this budget, IATO President and ex-chairman ASSOCHAM, Subhash Goyal, expressed his regret that three of the main demands of IATO - 90 per cent abatement of Service Tax on package tours, total exemption from Fringe Benefit Tax in case of tour operators and increase in the budget allocation for tourism sector have not been met by the finance minister who on the other hand increased the Service Tax rate from 10 per cent to 12 per cent for all including tour operators.

But this is not what the industry had asked for. Calling the budget 2006 as a major disappointment Lalit Suri, Member of Parliament and chairman, tourism Committee of FICCI, said, "The announcement that 15 hubs will be identified and developed as far as rural tourism is concerned has a lot of ambiguity in it. What, when and how nobody is aware. We have not been given full infrastructure status. There are currently 90,000 rooms in the country in all the categories, we need to build at least 10,000 rooms which will require Rs 75, 000 crores investment . We had suggested that all the hotels that are making profit should be encouraged to reemploy or put back that profit into circulation and 50 per cent of that investment should not be taxable. But it has been ignored completely. We wanted full infrastructure status and that has also been overlooked."