We must revisit hotel industry demand: FM

Finance minister Pranab Mukherjee said on Tuesday there was a case for looking into the demands of the hospitality industry, which had sought tax breaks and infrastructure status in the Budget 2009-10, presented to the Parliament on Monday.

"There is a case. Let me revisit it once again. I shall have to look into it, in consultations with others. . .," Mukherjee said at a post-Budget interaction with Indian industry representatives.

He said the hospitality industry issues were considered, 'but we found that it is difficult to do it (accept demands) right now. I do not say that there is no case. . .To what extent I can provide some incentives, I can't comment."

Mukherjee was responding to comments from Bharat Hotels Ltd chairperson and managing director Jyotsna Suri, who said hospitality industry provides 'six per cent of total employment in the country and contributed. . .Rs 50,000 crore (Rs 500 billion) in foreign exchange in 2008-09. It is unfair that our industry is completely ignored."

She said the industry is capital as well as people intensive and should be given infrastructure status, besides being exempted from paying tax on foreign exchange earnings.

Suri said the government should also provide tax holidays to all the new hotels being constructed, throughout the country.

The hospitality industry had expressed disappointment with the Budget, saying that it wasn't even mentioned in the finance minister's speech.

"The Budget did not give the hospitality and tourism industry the importance that it deserves, specially when the country expects from our industry to generate more and more jobs," Federation of Hotel and Restaurant Association of India president M P Purushothaman had said reacting to the Budget.

He said there is nothing in the Budget to aid sectoral growth and capacity expansion for 'us to maintain the competitive edge as a cost effective tourist destination.'

Even the Travel Agents Association of India expressed unhappiness over the Budget.

"Not a single item regarding the sector has been addressed. There is no mention of export industry status for hospitality and tourism, no tax holiday as demanded, no rationalisation of Section 80 HHD of the Income Tax Act under which travel operators could invest their savings in the industry," TAAI president Rajji Rai said.

"The travel industry is one of the biggest employers. The government must wake up to the harsh reality that the precursor to economic revival is the tourism sector," Rai added.