On February 1, Finance Minister Nirmala Sitharaman presented the interim budget for the fiscal year 2024-2025, with a primary emphasis on stimulating economic growth. On the tourism front, a notable announcement pertained to the focus on enhancing tourism infrastructure on islands, with specific attention given to Lakshadweep. The budget also unveiled ambitious plans for infrastructure development, particularly in the establishment of new railway and port corridors and the growth and enhancement of air connectivity and airport infrastructure across India.
One notable highlight is the boost in the budgetary allocation for the tourism ministry, which has been increased to Rs 2,450 crore in the fiscal year 2024-25. This marks a significant rise of 44.7 per cent compared to the revised figure for the current financial year, which stood at Rs 1,692 crore. Nevertheless, there has been a reduction in expenditure on certain aspects, particularly in promotion and publicity. The allocation for overseas promotion and publicity, which includes market development assistance, has experienced a notable decrease of 97 per cent, plummeting to Rs 3 crore in Budget 2024 from the previous allocation of Rs 95 crore in the preceding budget. This year, the Prashad Darshan scheme of the tourism ministry has maintained its budget allocation at ₹240 crore, consistent with the previous year. An amount of Rs 1,750 crore has been earmarked for the Swadesh Darshan scheme. Initiated in 2014-15, this scheme offers financial assistance to state governments for the development of tourism infrastructure.
The budget also encourages foreign direct investment (FDI). This move is anticipated to have a positive impact on the country’s economy by fostering international collaboration and promoting businesses. “The FDI inflow during 2014–23 was $596 billion, marking a golden era. That is twice the inflow during 2005–14. To encourage sustained foreign investment, the government is negotiating bilateral investment treaties with foreign partners in the spirit of ‘first develop India’, said FM Sitharaman in her speech.
“States will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them on a global scale. Tourism, including spiritual tourism, has tremendous opportunities for local entrepreneurship. Since the pandemic, there has been a surge in domestic tourism, and the addition of air routes and port connectivity is expected to create more jobs,” said Sitharaman.
Sitharaman also emphasised substantial government investment in boosting the tourism sector across the country. Particularly, she highlighted the dedicated attention that will be directed towards enhancing tourist infrastructure in the Union Territory of Lakshadweep. The move to prioritise Lakshadweep comes at a significant juncture, with many Indians seeking alternative destinations following a diplomatic row with the Maldives, a popular archipelago nation among Indian tourists. The government’s focus on improving Lakshadweep’s tourist facilities aims to capitalise on this shift in preferences and position Lakshadweep as an attractive and accessible destination.
“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. This will also help in generating employment. Further, after the success of Vande Bharat trains, around 40,000 more rail bogies will be converted to Vande Bharat coaches. This will further create job opportunities while reducing travel time as well as increasing tourism across the country,” the Finance Minister stated.
Sitharaman further said that the success of organising G20 meetings in 60 places presented the diversity of India to a global audience. She said that the country’s economic strength has made it 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,” she mentioned.
Sitharaman also reiterated the Union Government’s commitment to the growth and enhancement of air connectivity and airport infrastructure across India. She highlighted the significant strides made in the aviation sector over the last decade, with the number of airports doubling to 149. Underscoring the success of the Udan scheme in facilitating connectivity to tier-2 and tier-3 cities, the finance minister reported that 517 Udan routes are actively serving 1.3 crore passengers. Moreover, she emphasised the government’s dedication to the continued expansion of existing airports and the swift development of new ones. Sitharaman also pointed out the robustness of the Indian aviation industry, noting that domestic carriers have collectively placed orders for 1,000 new aircraft.
The Interim Union Budget 2024, however, has evoked a mixed reaction from various sectors of the travel and tourism industry, including hospitality, aviation, and travel associations. While the finance minister seemed very positive about promoting the tourism sector, many tourism stakeholders have also expressed enthusiasm for the initiatives aimed at boosting domestic tourism, enhancing connectivity, and investing in infrastructure. However, not everyone is pleased. All major travel associations have expressed disappointment, citing the absence of specific support measures for the travel and tourism sectors.
Here are some reactions:
K.B. Kachru, Chairman Emeritus and Principal Advisor, Radisson Hotel Group, South Asia
The Government of India’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 in the country through the development of airports, railway metro lines, ports on our unexplored island, including Lakshadweep, and tourism infrastructure will enhance demand and generate employment. This is not just a boost for tourism; it’s an investment in India’s potential. We are optimistic about additional futuristic support from the government in granting infrastructure status to hospitality and tourism, which will help us achieve a long-awaited status. We foresee that this will have a multiplier impact and drive significant investment from the private sector.
Vinay Dube, Founder and CEO, Akasa Air
The interim budget presented by the finance minister is a fine reflection of the new India and will strengthen India’s position as a global economic powerhouse. We would like to acknowledge the government’s efforts towards galvanising the nation’s aviation industry by doubling the number of airports and fostering holistic air connectivity, which enabled 1.3 crore Indian citizens to travel by air. The focus on inclusive and sustained growth is a welcome move and will catalyse India’s progress. As India’s fastest-growing airline with an orderbook of over 200 aircraft, we are energised by the government’s continued focus on enhancing air transport infrastructure to make air travel accessible for a greater number of Indians.
Madhavan Menon, Executive Chairman, Thomas Cook (India) Limited
The interim budget presented by the finance minister has focused 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.
Rajiv Mehra, President, IATO
As far as the budget is concerned, there is nothing much for the tourism industry except the government giving an interest-free loan to the states to develop the tourism sites and for advertisements and marketing. However, how many states will accept this offer? I have no idea because that money has to be returned to the central government. Apart from this, there is nothing much there. The budget allocation for the Ministry of Tourism has been increased from 1600 crores to 2000 crores, but the allotment for international market promotion has been very low. With a mere Rs 3 crore allotted for overseas promotion, the tourism industry should now forget that the government will spend any money abroad or operate any FAM tours to bring international travel agents in. As we all know, developing spiritual tourism, including the development of the Lakshadweep Islands, will take some time—at least three years minimum.
Riaz Munshi, President, OTOAI
As always, even in this year’s budget, there is nothing positive for the travel and tourism industry.
Jyoti Mayal, President, TAAI
The interim budget presented by Hon. Finance Minister Nirmala Sitharaman has shown no respite to the travel agents and tour operators. TAAI states that various representations were made to the Finance Ministry on concerns of ease of doing business, specifically on GST, TCS, and other challenges faced by the travel and tourism sector in India. TAAI, being the nodal and premier body, feels that although there are challenges and concerns pending in the interim budget for over two years, they could have been addressed by the Hon’ble FM, especially the TCS levy on the Overseas Tour Programme Package, which is impacting the business of travel agents operating in India, making them non-competitive and impacting the liquidity of the traveller. We are happy with the announcements made on development and infrastructure for the tourism industry, specifically in the North East and island destinations like Lakshadweep, thereby promoting investment in the sector. Also, the FM spoke about Viksit Bharat and has encouraged other industries but totally ignored the travel agents and tour operators who are the catalysts in the development, enhancement, and promotion of tourism, be it domestic, inbound, inland, or outbound. Further, with the increase in UDAN and the aviation sector in India at large, there have been no observations noted or any directions formulated on airlines going bankrupt. TAAI has already submitted a document to the authorities on the protection of the interests of consumers, travellers, and travel agents against the bankruptcy of airlines operating in India, whereby hundreds of crores are lost by the travelling community. Overall, at the macro level, tourism infrastructure and development have gotten a boost, which is a long-term benefit, but nothing in the coming year will benefit the trade at large. We appreciate her views on enhancing and promoting spiritual tourism, which will certainly lead to more employment and entrepreneurship in the sector. Additionally, the government’s encouragement of the development of new airports, rail corridors, roads, and ports, which shall enable last-mile connectivity, is also seen as long-term growth-oriented. We also acknowledge that the government has placed MICE, especially business and conference tourism, as a prime focus area, but the same is not possible without appropriate infrastructure, which will take a few years to develop. Overall, we feel that once again, the travel trade has been ignored.
Anil Kalsi, Vice President, TAFI
Tourism had a special mention more than once in the budget. The vision to enhance spiritual tourism will be a catalyst for domestic and NRI tourism. The Islands’ development plan is a welcome step and will open up new destination options for Indians and foreigners alike. We expect numbers to grow as more hotels and infrastructure come up in the new thrust areas in the very near future.
Pankaj Nagpal, Managing Director, Travstarz Global Group
Pranav Kapadia, Founder and Director, Global Destinations
Global events like the prestigious G20 Summit and the Cricket World Cup played an important role in putting India on the global map attracting tourists for business and leisure. Hence, there are a lot of expectations and optimism around the potential of the Union Budget 2024. Along with boosting inbound tourism, government priorities and policies should also focus on travel to international destinations strengthening diplomatic relationships, economic benefits, cultural exchange, and enhancing global connectivity.
The government to address key concerns of rationalizing the TCS structure and reducing aviation fuel costs which can trigger a chain reaction of boosting air connectivity and frequency to destinations around the world. The government should also focus on budgetary provisions that encourage and support sustainable tourism practices, and responsible tourism initiatives. There is also a need to encourage technology adoption within the tourism industry, improving efficiency and customer experience like DigiYatra which is a welcome move by tourists and industry.
Chirag Agrawal, Co-Founder, TravClan
Tourism cannot grow without investment. We welcome the government’s initiatives on developing iconic tourist centres 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!
Harjinder Singh, Director, 24x7travels.com
Yet again, tourism, the heartbeat of countless livelihoods, is sidelined in this budget. SMEs, the backbone of our industry, remain neglected. The silence speaks volumes, echoing the disregard for those who tirelessly work to showcase our nation’s beauty.
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 the government’s pledge for the comprehensive development of tourist centres, 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 sectors, enabling us to showcase the incredible diversity and richness of our nation to the world.
TTJ View
While the Interim Union Budget 2024 demonstrates a proactive stance towards laying the groundwork for long-term growth in the tourism sector, the persisting concerns within the travel trade underscore the need for nuanced and targeted support and attention to the challenges faced by the sector. The mixed reactions from various stakeholders highlight the importance of addressing immediate challenges faced by the travel and tourism industry to ensure a comprehensive and sustainable recovery.
