Union budget 2023 and the hospitality sector in India
Updated: May 13
India is one of the most unique nations on earth, and the World Population Review 2022 estimates that there are 1.417 billion people living there. As a result, the country is rich in culture and heritage, and its economy is expanding quickly—it is expected to grow by 6.5% in the fiscal year 2023–2024, which is faster than most other nations' economies. A country experiencing rapid growth means that companies in every industry strive to operate successfully and produce income to the best of their abilities.
Every sector, whether it be at the macro or micro level, depends on the funds that are allotted to them in order to plan their future plans, increase revenues and profits, create advancements that would spur the expansion of the company, and remain competitive in the market. Every year, the country's finance minister announces and executes an annual budget in the month of February, just before the current fiscal year ends and a new one begins, i.e., 1 April (current year) - 31 March, in an effort to ignore this vitally important task (next year). A balanced economic growth along with social justice and equality is the goal of the budget.
India has been able to develop a robust tourism and hospitality industry that will contribute $250 billion by 2023. Before the pandemic, the industry made up 7% of the overall GDP; even though it decreased to 4.3% in 2020, it has since witnessed a steady growth and is steadily rebounding.
The potential of this industry has been realized and recognized by the government and to support the industry, finance minister Nirmala Sitharaman, in the annual budget of 2023 allocated Rupees 2400 crore, 18.42% higher than that in 2021-22. The travel and tourism industry has been identified as one of the 4 key transformative opportunities in “Amrit Kaal”. The term refers to the period of 25 years, starting from the 75th year of independence to the 100th year. The vision of Amrit Kaal encompasses a technology-driven and knowledge-based economy with resilient public finances, and a robust financial sector.
A total of Rs. 1,644 crore was set aside in 2022 for the construction of tourism infrastructure, including Rs. 235 crore for the Pilgrimage Rejuvenation and Spiritual and Heritage Augmentation Drive (PRASHAD) Plan and Rs. 1181.30 crore for the Swadesh Darshan Scheme. Each of these programmes emphasized expanding employment options for nearby communities and offered chances to uphold tradition and religious beliefs.
It gave a boost to several pilgrim tourism areas as well as the entire nation collectively. These schemes also resulted in attracting more foreign tourists who wanted to explore the customs and society of India. It helped the entire country as well as a number of pilgrim tourism destinations.
130 crore rupees were used to construct famous locations, while the remaining funds were intended to support service providers. All the initiatives being made to enhance the tourism infrastructure have been allocated Rs. 421,50 crore for promotion and publicity operations. The North-eastern states also received funding in the amount of Rs. 227 crore, which helped the tourist and hospitality industries grow. 8 National Ropeway Projects were granted in 2022–2023 as another measure to ease traffic in mountainous areas.
Although the budget provided some relief for medium-term infrastructure measures, FAITH, the policy federation of all national associations representing the nation's travel, hospitality, and tourism industry, claimed that an immediate opportunity for more direct intervention to support the hospitality and tourism companies and their employees who are still recovering from a crisis was missed.
In order to advance the business, states will aggressively engage in initiatives and public-private partnerships, and the promotion of tourism will be on "mission mode" for 2023. The development of 50 towns or cities into complete tourist attractions- a challenging feat that would attract both local and global tourists is one of the important elements that has been underlined in the Rs. 2,400 crore Union budget.
Evidently, the nation has enormous potential for both domestic and foreign tourism. To assure more revenue for local hospitality and tourism businesses, there will be a focus on encouraging domestic travel among the populace. In addition, 50 airports, helipads, water aerodromes, and landing fields will be renovated to improve regional air connectivity and support designated tourism corridors, much as the current Golden Quadrilateral of India.
The pandemic caused a decline in tourism and hospitality, which was detrimental, but as the sector is now experiencing a resurgence, the potential for growth has been acknowledged during this budget discussion. This reflects the scope for a large number of job opportunities and even entrepreneurship for the young generation of the country, which will be responsible for the industry's future. There has been a noticeable trend where people have entered the market, started leasing modest hotel properties, and hired asset managers or third party management firms in India to help them operate the properties. This gives rise to a new micro-economy sphere which has been in the shadows for a long time.
Along with future developments in infrastructure and strategies, the government has not missed the opportunity to safe-guard our valuable heritage. It was announced that 2023-24 would also focus on creation of Unity Malls whose objective is to promote and increase sales of “1 District 1 Product”, GI products and local handicrafts. This would assist the local communities to have a steady source of income, increase popularity and awareness of unique products from each state and help in preserving the culture of India. To support these initiatives, schemes like Swadesh Darshan and Dekho Apna Desh have been introduced.
The discussion on continuing the development of tourism in the North-Eastern states has been received with a positive attitude. The advancement of tourism infrastructure on the borders of the 7 sister-states will give rise to tourist inflow even to the more remote parts which are yet to be explored by many. This could attract foreign tourists who would want to discover a different side of India. The government is striving to create a holistic travel experience by eventually launching a one-stop application which would include features of tourists guides and physical connectivity allowing travellers to have a hassle-free experience and save them from misinformation.
Overall, the implementation of these initiatives will give a boost to the market shares of several hospitality and tourism operators. Indian Hotels Company Ltd, the parent company of the renowned TAJ Hotels and Resorts witnessed a rise of 9%, EIH gained 7% while Lemon Tree was up by 6%. This could only go to show how the incentives that have been given to the Tourism sector are already showing a positive effect and it does not seem likely to slow down. The Prime Minister shared that Amrit Kaal will be the golden age of the country and the developments that will take place in the span of 25 years will make up for what was lost during the years of slavery. It will be a period where the country will be more self-reliant and the gap between villages and cities will be reduced while introducing state of the art technology in all sectors. Tourism being as vital as it is to the country will be one of the key focus points during this period and the government will continue to invest their time and funds in ensuring this sector reaches its highest potential for the betterment of the nation.
Written by Vylaica S. for ProMiller