Union Budget 2016 to improve transportation network

The Union Budget 2016, presented by finance minister Arun Jaitley, has received mixed reactions from the travel tade fraternity. Major announcements relating to the travel and tourism sector were expected by the industry. However, the Budget focused on development of roads, highways and ports.

A total amount of INR 97,000 crore will be spent on roads and highways, improving domestic road connectivity; along with an investment of INR 218,000 in roads and railways. The national highways network will see an addition of 10,000 km. Additional 50000 km of state highways will be taken up for upgradation as national highways. The government will also implement a series of measures to modernise ports. An amount of INR 800 crore has been allocated for inland waterways, whereas under-served airports will be revived, through partnerhips with state governments in order to enhance regional connectivity.

Sarabjeet Singh, vice chairman, Federation of Associations in Indian Tourism and Hospitality (FAITH) commented, "There is nothing for tourism in this year's Union Budget. For the past six months, we have been in talks with various government officials, representing the travel and tourism sector. We were hoping that service tax on foreign tourists would be pulled back, which would have boosted inbound tourism, but our expectations have not been met. The government has completely overlooked tourism in this Budget. It has been announced that the under-served airports will be developed, but that will only cater to domestic travel; there are no announcements for inbound tourism."

Sharat Dhall, president, Yatra.com opined, “The much awaited Budget has turned out to be very friendly for the common man, but there could have been a bit more for the corporate sector. The proposal to increase the tax on ATF will result in increase in airfares and dampen air passenger growth which could have been a catalyst for economic growth. However, the focus on revamping roads and airports across the country is a positive move that should provide a fillip to infrastructure and the tourism sector as it will enhance connectivity to the smaller cities and encourage people to travel to unexplored destinations. Liberalisation in public transport and the government’s plea for private investors to contribute in refurbishing highways is also expected to create a positive ripple in the travel industry.”

J B Singh, president and CEO, InterGlobe Hotels expressed, “The budget has provided a sharp focus on building a stronger ecosystem for the travel and tourism industry. The INR 2,21,246 crore outlay for infrastructure development, INR 97,000 crore investment in road sector and the intent to build as well as upgrade highways is a measure that will aid connectivity across the country. Last mile connectivity is a key hurdle for tourism and travel in India, and we believe this measure will aid in overcoming this challenge."

"Emerging rural India has a lot to offer from a point of view of tourism. There is immense potential in these markets to develop hubs of tourist attraction and also develop it as a means of employment for locals. The government’s focus on development and empowerment of emerging India – Tier II and Tier III cities – is a positive sign. It will boost consumer sentiment and purchasing power and also encourage the next phase of rural tourism in India. The industry was keenly looking forward for the government to focus on incentives for the commercial real estate sector such as REITS, real estate regulatory bill and single-window clearances, however it continues to remain a challenge,” JB Singh added.

Manmeet Ahluwalia, marketing head, Expedia India said, “This budget has specifically focused on infrastructure across the country with a huge outlay for roads and highways, railways and reviving the unserved and underserved airports and airstrips in the country. The government realises that as the global economy wavers, domestic demand will be the key to tourism growth, especially to untapped regions like the North East. The government is adopting measures from some of the thriving global tourist destinations, wherein public transport is critical not only for daily commuters but is also the backbone for tourist traffic. Strengthening the infrastructure across levels will definitely strengthen India as an attractive tourist destination in the global ranks.”

Jayant Nadkarni, president, Business Aircraft Operators Association (BAOA) said, "Developing new airports is always good. But we already have many airports without much connectivity. For operations to commence, we need clarity on funding, taxation, duties, and incentives. These are yet to come together for the small aircraft sector in business aviation and in scheduled commuter flights to remote areas. The potential for growth clearly exists."

Ankur Bhatia, executive director, Bird Group; and member, CII National Committee on Civil Aviation opined, “The finance minister this year has laid emphasis on rail and road infrastructure developments as well as on startups and Make in India campaign, which are good measures. We welcome the decision of reviving underserved airports by allocating a budget of 50-100 crore each, developing 10 out of 25 non-functional airstrips in partnerships with state governments, which will definitely accelerate the development of regional aviation sector and will also give a well deserving boost to the overall aviation sector. Although, levying of additional cess in hospitality, could have been avoided as the industry is already burdened with taxes, we do hope that the cess levied on combustion will be used for betterment and development of green vehicles and infrastructure."

Riyaaz Amlani, president, National Restaurant Association of India (NRAI) opined, “The Union Budget 2016 was largely agrarian in nature and the restaurant and F&B sector was looking forward to some impetus. While we had also hoped for some announcement on implementation of GST, the industry will be impacted to a limited degree by the increase of service tax, through the introduction of 0.5 per cent agri cess. However, the decision to circulate the Model Shops & Establishments bill to state governments for voluntary adoption is a welcome move and we hope to see some traction on it.”

Monday, 29 February, 2016
The Financial Express