AIR Spotlight: Cabinet decision for giving boost to Tourism sector

AIR Spotlight is an insightful program featured daily on the All India Radio Newsonair. In this program, many eminent panelists discuss issues of importance which can be quite helpful in IAS exam preparation. This article features discussion on a recent cabinet decision to boost the tourism sector.

Participant – Dr. Subhash Goyal, Tourism and Hospitality Expert

Moderator – Ruchika Chitravanshi, Journalist

Introduction: 

• Recently, the Union Cabinet has approved the enhancement in the limit of Emergency Credit Line Guarantee Scheme (ECLGS) from Rs.4.5 Lakh crore to Rs. 5 Lakh crore.
• This additional amount is dedicated  exclusively for enterprises in hospitality and related sectors.  
• This is done to support the hospitality and related industries affected severely by COVID-19 Pandemic.

What is ‘Emergency Credit Line Guarantee Scheme’?

• ‘Emergency Credit Line Guarantee Scheme’ was a scheme launched as a part of the Atma Nirbhar Bharat package for the Micro, Small, and Medium Enterprises (MSME) borrowers to mitigate the distress caused by the COVID-19 pandemic. 
• The additional amount of Rs. 50,000 crore approved recently would be made applicable to enterprises in hospitality and related sectors till validity of the scheme which is 31.3.2023.
• This  is expected to provide crucial support to enterprises in these sectors by incentivizing banks and other lending institutions to provide additional credit of up to Rs. 50,000 crore at low cost, thereby aiding these business enterprises to meet their operational liabilities and continue their businesses.
• With revised and increased sovereign guarantee, the stakeholders and guides would be provided loans with 100% guarantee, meaning that if the borrowers default on the repayment of the loan, the amount would be covered by the Center. 
• There would also be no processing charges or requirement of additional collateral on these loans, and any foreclosure or prepayment charges would also be waived off. 
• This is a huge relief to thousands of licensed tourist guides and recognised travel agencies as earlier scheme only benefited large hoteliers and enterprises due to reluctance of banks to provide loans to smaller stakeholders.

Impact of Pandemic on Tourism and Hospitality Sector:

• The tourism and hospitality sector accounts for around 10% of the global GDP. It accounted for 9.2 per cent of India’s GDP and generated around 26.7 million jobs in 2018 alone.
• The sector has a tremendous potential to create employment opportunities in large numbers, given the higher forward and backward linkages of the sector. 
• The sector acts as a multiplicator of jobs, as every direct job in this sector creates 6-8 times indirect jobs.  
• Apart from the obvious economic significance of the sector, it also has significant social impact given its potential for a distributed model of growth and employment opportunities for a wide variety of people including the unskilled and semiskilled laborers.  
• Extensive travel restrictions and movement regulations in place, both at the global level and within the country, the travel and hospitality sector has been severely affected and is facing a crisis. 
• Slump in the sector will have a considerable macro economic impact in the form of reduced growth and job loss.

Way Forward: 

• Government should take suggestions from stakeholders such as ‘Travel Agents Federation’, ‘Indian Association Of Tour Operators’ and etc to create an integrated  approach to boost this sector.
• We have to learn to live with pandemic and such other disruptions instead of closing down the economy. 
• With ongoing war in Eastern Europe and travel restrictions in China, India should focus on  aggressive digital marketing to attract foriegn tourists.
• Encourage innovation and investment in the Tourism sector with incentives like tax breaks and subsidies.

Conclusion:

The travel and tourism industry and governments should continue to reinforce their coordination mechanisms to accompany the businesses, notably the smallest ones, and the workers. Governments need to already consider the longer term implications of the crisis, while staying ahead of the digital curve, supporting the low carbon transition, and promoting the structural transformation needed to build a stronger, more sustainable and resilient tourism economy. The crisis is an opportunity to rethink tourism for the future.

Read more Gist of AIR Spotlight here.

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