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Industry’s Reaction to Interim Budget 2024-25

  • February 2, 2024
  • 13 min read
Industry’s Reaction to Interim Budget 2024-25

Overseas promotion and publicity including MDA has seen Budget 2024 allocation coming down by 97% to Rs 3 crore from Rs 100 crore

Union budget 2024 has a strong focus on domestic tourism. States will be offered interest-free loans to boost tourism within their borders, said Finance Minister Nirmala Sitharaman. It holds substantial potential for generating tourism revenue in India and creating numerous job opportunities.

The Budget has increased allocation for the tourism sector to Rs 2,449.62 crore in the interim Budget 2024-25 announced on February 1, about 44.7% higher than the revised figure for the current fiscal. In the Union Budget 2023, the Ministry of Tourism was allocated Rs 2,400 crore which was revised to Rs 1,692.10 crore.

Under central sector schemes, tourism infrastructure has seen a significant increase in Budget 2024 allocation to Rs 2,080.03 crore from Rs 1,294 crore last year.

Overseas promotion and publicity including market development assistance has seen Budget 2024 allocation coming down by 97% to Rs 3 crore from Rs 100 crore in the previous Budget.

“The success of organizing G20 meetings in sixty places presented diversity of India to global audience. Our economic strength has made the country an attractive destination for business and conference tourism. Our middle class also now aspires to travel and explore. Tourism, including spiritual tourism, has tremendous opportunities for local entrepreneurship,” Sitharaman said in her Budget Speech.

She added: “States will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them at global scale. A framework for rating of the centres based on quality of facilities and services will be established. Long-term interest free loans will be provided to States for financing such development on matching basis.”

To address the emerging fervour for domestic tourism, projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep, she said.

Tourism Herald brings together the industry’s reaction to Union Budget 2024-25.

K B Kachru, Chairman Emeritus and Principal Advisor, Radisson Hotel Group, South Asia

“The government’s continued focus on domestic tourism in the interim Budget 2024-25 is encouraging. Empowering iconic destinations and local entrepreneurs through interest-free loans and quality ratings will elevate India’s tourism landscape. The projects to enhance connectivity through the development of airports, railways, metros, ports and the tourism infrastructure will enhance demand and generate employment.”

Madhavan Menon, Executive Chairman, Thomas Cook (India) Limited

“The interim Budget presented by the Finance Minister has focussed on Tourism with a multipronged approach that we believe will create a multiplier effect across aviation, tourism and allied sectors, boosting growth and employment generation.

We welcome the announcements on airport development and expansion: having already doubled to 149 airports in the last decade, the government’s plans to boost air connectivity by the addition of 517 new routes across Tier 2-3 cities, carrying 1.3 crore passengers via the UDAN scheme, will play a critical role with vibrant hub and spoke air corridors to boost accessibility-affordability for Regional India.

Implementation of major rail connectivity corridors via the PM Gati Shakti program together with port and metro/rapid transport expansion will serve to create valuable multi modal connectivity for Tourism.

We welcome the special focus on Domestic Tourism which represents a vibrant growth driver via the government’s plan of long-term interest free loans to States; development of iconic tourism centres by States along with marketing on global standards. What was noteworthy is the reference to Spiritual Tourism and projects for port connectivity, tourism infrastructure and amenities on islands including Lakshdweep – aimed at development of India’s hidden gems and employment opportunities.

Further, the strong capex outlay of Rs 11.11 lakh crore, a significant 4% of our GDP, will serve as a catalyst to the Country’s growth potential and job creation.”

Param Kannampilly, Executive Chairman, Concept Hospitality

“In the wake of the recent budget announcement, we applaud the government’s foresight in recognizing the immense potential within tourism, particularly the uncharted territory of spiritual tourism as the people of India are now willing to travel and explore more. This visionary approach not only unlocks doors for local entrepreneurship but also serves as a catalyst for employment generation. The emphasis on developing iconic tourist centers and global-scale marketing aligns seamlessly with our commitment to providing unparalleled experiences. This initiative not only enhances our global standing but also signifies a collective effort to harness the untapped potential within our borders. Additionally, our country’s economic strength positions it as an attractive destination for business and conference tourism, a trend we are prepared to champion.”

Ajay Singh, CMD, SpiceJet and President Assocham

“It is India first budget. A confident budget of a confident government that focuses on the objective of ensuring that India becomes a 5 trillion-dollar economy by 2025 and a developed nation by 2047. I commend the FM for her unwavering commitment to sabka saath, sabka vikas, sabka vishwas. I commend especially the increase in infrastructure spending that will have a multiplier effect on our economy. I commend the evident railway corridors, and the one lakh crore fund for research and development and the startup sector. The emphasis on clean energy, technology and digital infrastructure will make India a world leader. This is India’s moment and this budget is part of a continuous process of making policy that will provide massive opportunities for India and Indians.”

Rajiv Mehra, President, Indian Association of Tour Operators

“We welcome the increase in budgetary allocation to around Rs 2,000 crore from last financial year’s around Rs 1,600 crore and mention of branding in the Budget speech of the Finance Minister. But we must remember that unless we don’t do roadshows overseas, familiarisation trips and publicity campaigns abroad, till then we will not be able to draw (foreign) tourists to our country. Every country in our neighbourhood is courting Indian tourists but our effort towards drawing tourists from abroad is zilch. We have to understand that we need to compete with other nations. The urgency and the importance this matter should receive are still missing.”

Kanika Tekriwal, Founder, JetSetGo

’As the Finance Minister charts the course for India’s economic future in the interim budget 2024, JetSetGo stands in harmony, sharing a vision of ‘Reform, Perform, and Transform.’ Aligned with the government’s forward-looking initiatives, we celebrate the doubling of airports to 149, enabling private aviation companies like ours to extend our reach and serve as a vital link for India’s economic leaders, entrepreneurs, and decision-makers. The expansion of airport infrastructure complements our commitment to efficient time management and personalized services, ensuring a seamless travel experience. We are enthused by the focus on enhancing tourism infrastructure on islands, recognizing the unique appeal of private jets for reaching offbeat destinations. Emphasizing urban mobility, the Finance Minister’s vision paves the way for growth in the aviation sector. The broader emphasis on infrastructure development and increased spending, coupled with the optimistic outlook for India in the global aviation market, solidify our confidence in the growth story. JetSetGo stands aligned with this vision, having already established strategic partnerships with aircraft technology companies to introduce Advanced Air Mobility solutions, enhancing regional connectivity and contributing to India’s dynamic aviation landscape’’

Shamsher Dewan, Senior Vice President & Group Head – Corporate Ratings, ICRA

“The Government’s continued thrust on tourism and focus on addressing some of the structural bottlenecks augur well for hotel demand. Special assistance has been announced to State Governments for infrastructure development, through 50-year interest free loans. There are plans for development of iconic tourist centres and framework for rating the same as well. There is focus on enhanced connectivity, through airports, heliports and advance landing grounds. The budget also proposes promotion of coastal shipping to improve access to some destinations. Availability of requisite information through sector-specific skilling and informative guides would improve tourist experience and facilitate demand growth as well. Further, continued emphasis on ease of doing business will also be beneficial for the industry, considering the pick-up in new supply announcements in the last 15-18 months. The Draft National Data Governance Policy, which aims at data security, has been prepared and is under finalization. Overall, the proposals in the Union Budget are expected to support the ongoing demand upcycle in the domestic hotel industry.”

On Aviation: “The Interim Budget for FY2024-25 has reiterated its focus on improving air connectivity through airport infrastructure development, given the growing air traffic demand especially in tier-2 and tier-3 cities. New routes offered by airlines, coupled with large aircraft orders to cater to growing air travel demand will further boost domestic air travel. The budget also provides a thrust on promotion of tourism with focus on business and conference tourism in lines of the recently concluded G20 summit to attract international tourists. Tourist destinations covering specialized areas like spiritual tourism will also support regional air travel under the UDAN scheme.  Domestic passenger traffic has recovered to ~114 million in 9mFY2024 and is likely to grow by 8-13% in FY2024 over FY 2023 to surpass pre-covid levels. ICRA’s outlook remains stable aided by fast-paced recovery in domestic passenger traffic, along with improved pricing power witnessed by the industry players as well as easing in ATF prices.”

Shikhar Aggarwal, Joint Managing Director, BLS International

“The travel and tourism sector serves as a crucial economic driver for India, and this year’s budget underscores the commitment to fostering its growth and development. The emphasis on encouraging states to invest in and enhance iconic tourist spots is a strategic move poised to impact foreign receipts, thereby significantly creating more employment opportunities.

The government’s fast-track development and investments in airport infrastructure and road connectivity projects will play a pivotal role in boosting connectivity. This, in turn, is expected to result in a substantial increase in the number of inbound travelers, further solidifying India as one of the most sought-after destinations among global travelers. Moreover, announcing the port connectivity, including in places like Lakshadweep, will open up additional gateways for travelers, unlocking more avenues to explore the diverse offerings of our incredible nation. Additionally, the focus on spiritual tourism is poised to contribute immensely to the industry’s tremendous growth, ultimately bolstering the overall economic progress of India.”

Vishal Suri, Managing Director, SOTC Travel Limited

“The interim budget presented by Hon’ble Finance Minister has maintained status-quo on direct and indirect taxes thus keeping its impact neutral.

The government has set focus on the overall travel and tourism sector via infrastructure development, green energy, sustainability and looked at diverse initiatives for domestic tourism via a strategic approach for each segment – aviation, ports (waterways) and rail to strengthen regional connectivity to tier 2 and 3 cities.

We welcome the development on the rapid expansion of air connectivity with the addition of 517 new routes across Regional India’s tier 2 and 3 cities via the UDAN scheme – this will play a key role in strengthening accessibility.

The special focus on strengthening domestic tourism via implementation of rail connectivity corridors under the PM Gati Shakti initiative and upgrading 40,000 regular train boogies into high speed Vande Bharat trains will definitely strengthen surface transportation.

The Government’s plan on focus on spiritual tourism, development of iconic tourist spots and island destinations of India including Lakshadweep (projects for port connectivity, tourism infrastructure, and amenities) will generate employment thus boosting India’s economy. What is noteworthy, is the Government’s mindful move to form a panel to tackle challenges of higher population/over tourism, especially in destinations with sensitive ecosystems.”

Manish Rathi, co-founder and CEO, IntrCity SmartBus

“The government’s prioritization of improving public transportation and connectivity in the 2024 interim budget highlights the critical importance of efficient and reliable transportation in the country. Through promoting the thorough development and promotion of tourist destinations by individual states, the initiative aims to draw in more visitors from around the globe. In particular, the provision of long-term interest-free loans to states, matched by their own investments, is a noteworthy aspect. Not only does it facilitate crucial improvements to infrastructure and amenities, but it also ensures long-term sustainability and the optimization of these developments to fully showcase the unique characteristics of each destination.

With the increasing enthusiasm among Indians for traveling within their own country, specially to spiritual and culturally significant destinations. The announced endeavors cater to the expanding middle class income group, highlighting a progressive mindset in tapping into the untapped potential of the domestic market while simultaneously making Indian locales more attractive for everyone. The focus on domestic travel is not just a mere tactic; it serves to instill a sense of pride and knowledge in Indians about their own heritage while also jumpstarting socio-economic progress, especially in smaller cities. Through the promotion of inclusive development, these endeavors strive to empower local communities.”

Chirag Agrawal, Co-founder, TravClan

“Tourism cannot grow without investment. We welcome the government’s initiatives on developing iconic tourist centers and investing in tourism and connectivity infrastructure. Measures such as long term loans to states will foster long term development and unlock India’s tourism potential. We hope for more measures from the government that continue to build our air infrastructure and hospitality sector. This development will not just invite the world to explore our heritage but also ignite local economies and our pride!”

Aditya Sanghi, CEO & CO-Founder, Hotelogix

“We at Hotelogix wholeheartedly applaud the 2024 Union Budget for its steadfast commitment to advancing tourism, recognizing its pivotal role in shaping India’s economic prosperity and cultural legacy. The formidable barrier posed by the high cost of financing in India underscores the urgent need for strategic initiatives. By catalyzing investments in pivotal areas such as port connectivity, tourism infrastructure, and amenities, the budget heralds a new era of growth. Such targeted investment not only amplifies tourist inflows but also enhances the quality of the traveler experience, providing a significant boost to the hospitality sector. As the tourism sector evolves, the infusion of technology into travel and hospitality emerges as a pressing need. Technological advancements promise enhanced efficiency and elevated service quality, making it imperative for the industry’s sustainable growth. We eagerly anticipate further initiatives in this direction from the government and the active involvement of both public and private players.”

Sibasish Mishra, Founder and CEO, Bookingjini

“The 2024 Union Budget holds promising implications for our industry, with a commendable focus on uplifting marginalized sections and promoting tourism. Prioritizing the Garib (poor), Mahilayein (women), Yuva (youth), and Annadata (farmers) reflect an inclusive growth approach, ensuring equitable distribution of tourism-related benefits.

The commitment to developing iconic tourist centers and global marketing is a positive step that can significantly boost tourist influx, benefiting hotels and hospitality establishments nationwide. The ongoing expansion of airports over the past decade has enhanced infrastructure for the aviation and tourism sectors, improving connectivity for domestic and international tourists. This not only makes travel more accessible but also creates new opportunities for growth and expansion within the hospitality sector. Overall, the 2024 budget aligns well with the industry’s needs, paving the way for a more inclusive, connected, and prosperous future.”

Sandeep Arora, Director, Brightsun Travel

“As expected, this year’s budget puts a strong emphasis on domestic tourism, and we truly applaud this move. The commitment to providing interest-free loans to states for enhancing tourism within their borders is a positive step to boost domestic tourism in the country. There are many offbeat destinations within India that are unique and one of a kind, so government’s pledge for the comprehensive development of tourist centers, with a focus on branding and global-scale marketing, is another welcome move. This will undoubtedly pave the way for transformative growth in the travel and tourism sector, enabling us to showcase the incredible diversity and richness of our nation to the world.”

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