Lead Story

Bland Budget disappoints industry

EH Staff - Mumbai & Delhi

This February saw a populist budget that reached out to the rural poor. The priority was to bring food to the table of the masses rather than pander to the classes in hotels. While the Finance Minister focused on agriculture, health and education, tourism was given a complete miss, including the omission of the yearly fixture of an explicit budgetary allocation announcement.

The only provision spelt out was a five-year tax holiday from income tax for two, three and four-star hotels in specified districts that have UNESCO-declared World Heritage sites. Dinesh Khanna, president of FHRAI and executive director, Eastern International Hotels, expressing his disappointment, says, "We are not happy with the General Budget for 2008-09. Mere concentration on UNESCO's heritage sites is not sufficient towards growth of the sector. How many of the total heritage sites in India are accessible by roadways, railways and airways? Also, is there ample land near these locations to attract hotel investments?"

Sanjay Sethi, CEO and MD of Berggruen Hotels, feels that the terms of a similar tax holiday announced for hospital development across the country in specified regions should have been applicable to the hotel sector too, especially the budget segment.

Incentives too were absent in this budget. Adds Rajesh Mishra, senior VP at FHRAI, "The FM should have considered some sops to the hotel industry, which is struggling with several tax structures." Investment in the North East region too doesn't specify how much will be channelled for hotel development, Mishra points out.

Says Chender Baljee, CMD of Royal Orchid Hotels, "There is much more that could have been done. The infrastructure plans announced do not have much impact. Moreover, no relief has been provided to hospitality which has been affected by the rupee appreciation."

HA Mishra, managing director of Foodesign System Associates, feels that much more could have been done, especially in terms of sales tax and service tax rebates. Overall, Khanna feels that the hospitality industry will remain under pressure because of lack of support from the government.