The Prime Minister’s speech on June 30 coincided with the inauguration of Unlock 2.0. This is the phase when government policy should gradually be making the transition from relief to repair – repair of the economy from the ill-planned lockdown.
Unfortunately, the speech had little in terms of economic foresight and planning. It is not that the government is without funds. Raising petrol and diesel prices, and accessing the Rs 8,000 crore saved following the suspension of the MPLAD scheme, has given the government room to spend. We had suggested that this money be used to transfer Rs 10,000 directly to the accounts of each worker in the unorganized sector, who comprise nearly 90% of our workforce. But this government has decided to ignore workers and has chosen not to upfront help small businesses, especially in those sectors that generate enormous employment, both direct and indirect.
One such industry is hospitality and travel. To tell you its plight, and to explain how some of this could have been anticipated, let me take you back to March 5, almost four months ago. India was in the early days of the COVID-19 pandemic. As a country, we had only 30 positive cases. Even so, it was apparent to some of us that the danger was coming. The government continued to be in denial, but in neighbouring and regional countries, the panic was starting and the numbers were mounting. Six days later, the World Health Organisation formally declared the novel coronavirus outbreak a “pandemic”.
Why am I referring to March 5? On that day, in my capacity as a member of the Parliamentary Standing Committee on Travel, Culture and Tourism, I wrote to the chair of the Committee. I urged the Committee to take suo motu cognizance of the impact of COVID-19 on the aviation and tourism industry, and meet as early as it could.
My letter was ignored. The BJP is never in a mood to listen to constructive suggestions made by an opposition MP. In March, the party’s attention was on another MP – Madhya Pradesh – where defections were being organized and a state government was being toppled. The Committee finally met on March 18. It was a desultory effort. Few took the pandemic seriously, even though the number of cases was nearly 200 by then and calls for a lockdown had begun to be heard. The rest is history.
Tourism has been knocked out cold by COVID-19. It will be among the last industries to recover. People will regain full confidence to travel only when a vaccine is developed, and the impact can be imagined. Tourism accounts for nearly 10 per cent of India’s GDP and employs 12.75 per cent of our workforce (2019-20 figures). A Business of Travel Trade survey estimates 40 per cent of companies in the travel and tourism sector are at risk of closure over the next six months.
A massive 81 per cent of travel and tourism companies have lost 100 per cent of their revenue due to the COVID-19 pandemic. A further 15 per cent have lost up to 75 per cent. According to the Federation of Associations in Indian Tourism and Hospitality, between 38 and 50 million jobs are at risk. If even large, homegrown, well-funded players like MakeMyTrip, Yatra, Goibibo and Oyo are struggling, imagine the plight of the smaller players. As COVID-19 numbers keep rising, the risk to livelihoods will also continue to rise. The aviation industry is likely to suffer a loss of US$ 11.2 billion due to COVID-19. This could claim 2.9 million jobs.
Even before the pandemic, the travel and tourism sector was the step-child of the government. Budget allocations this year were low, despite the promise of making India an “incredible” destination. The optimists had hoped that tourism would be recognised as an export industry and get tax benefits, but the Finance Minister made no such announcement. Infrastructure and connectivity gaps were not substantially addressed either.
There were expectations that the government’s COVID-19 stimulus package would provide some relief to travel and tourism. Sadly, this Rs 20 lakh crore package – more a rebranded loan scheme than a genuine stimulus – offered very little for travel and tourism stakeholders. As I wrote earlier, the travel and tourism industry is critical for jobs and livelihoods. The airline pilot, earning a handsome salary, and the guide at a heritage monument, living off what he gets from tourists who engage him, are part of the same ecosystem. We can’t forget them.
Here is a wish list for this industry:
– Provide a tax holiday to all MSMEs, including travel and tourism companies, till the end of financial year 2020-21. If necessary, this can later be extended to the next financial year.
– Incentivise Indian citizens through income tax benefits (like tax deductions on expenses) for holidaying within India. Also incentivise Indian companies that hold meetings, conferences and events at venues in India by providing tax rebates.
– Extend the RBI loan moratorium from three months to twelve months, while ceasing the classification of loans as NPAs during this period. This will support many travel and tourism companies that are suffering a big drop in business. For some of them, and their employees, such a move will be a lifesaver.
I hope somebody is listening.
[This article appeared on NDTV.com| Wednesday, July 1, 2020]