Graphically Speaking

Moving in the wrong direction

India’s tourism sector needs a reboot, but is the government up for the challenge? 

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Published a month ago on Jul 04, 2020 Read

Tired of holding Taj Mahal by its dome in clichéd illusionistic photographs, tourists have moved on to ‘exotic’ Dharavi. With an area of 2.1 sq km and a population of around a million, it has become one of India’s top tourist destinations. From the opulence of Mughals to the ghettos of Mumbai, Indian tourism surely has a lot to offer, but COVID-19 has brought the industry to its knees.

According to a FICCI-Grant Thornton report, the travel and tourism industry in India is facing an overall loss of $16.7 billion with over 50 million jobs at risk due to the pandemic. Globally, the industry is estimated to lose $2.7 trillion in 2020 with 100 million jobs on the line. This will come as a major jolt to India’s GDP as the industry, growing at 4.9%, had contributed $194 billion to the economy in 2019. It also provided 87.5 million jobs and accounted for 12.75% of the total jobs created in the country.

Not foreign tourists, but domestic travellers drove the travel and tourism sector in India last year, states the report. Domestic spend in the sector stood at 83% and was expected to reach 89% by 2028, on the back of increase in disposable incomes and more leisure time at hand. This looks unattainable now due to social distancing restrictions and fear of travel brought by COVID-19. Consequently, the aviation sector is also looking at an estimated loss of $11.2 billion with up to 2.9 million jobs at risk. The Indian hotel industry has also been hit and losses for 2020 may reach $14 billion from the estimated $6 billion, depending on the persistence of the lockdown.

 

To tide over this crisiss, the report recommends relief measures to the Indian government which include a minimum 12-month moratorium period on all interest payments, loans and overdrafts; waiver of customs, excise, license fees, and parking and landing charges; waiver of GST on products and services offered by the industry for 12 months followed by a standard 5% GST till March 2022; direct cash support for the aviation sector; stimulus package to provide salary support to businesses; and creation of a separate tourism fund under Ministry of Tourism. It also recommends the government to promote niche opportunities like culinary and caravan tourism, corporate travel and self-drive holidays.

Pre-covid, the industry was expected to be worth $460 billion by 2028. Now, the onus is on the government to revive the sector, which is a massive employment generator.