Hospitality body FHRAI pleads PM Narendra Modi, others for fiscal measures to avoid ‘complete crumble’

By: |
May 16, 2021 12:45 PM

As per the RBI data on the deployment of gross bank credit to the hospitality sector, the outstanding amount for tourism, hotels, and restaurants as of February 26, 2021, stood at Rs 48,102 crore,

Hotel stocks, RBI MPC, Shaktikanta dasDas announced a separate liquidity window of Rs 15,000 crore to mitigate the adverse second COVID wave impact on certain contact-intensive sector. (IE Image)

Hotels and restaurants body Federation of Hotel & Restaurant Associations of India (FHRAI) in a representation to Prime Minister Narendra Modi has pleaded for special fiscal measures to rescue the hospitality industry from severe Covid impact. In the representation, which was also submitted to Finance Minister Nirmala Sitharaman, MSME Minister Nitin Gadkari, and Tourism Minister Prahlad Singh Patel, the federation requested for a three-year moratorium extension on all loans, complete waiver on the interest of loans from March 2020 till the time businesses are normalized, and a stimulus package for the industry’s working capital requirements.

Hospitality has been among the sectors including aviation, realty, retail, etc., that have taken severe Covid beating. As per industry estimates, a majority of the hospitality sector, which comprises micro and small-sized hotels and restaurants, has witnessed revenues plunging with multiple outlets and properties either shut or on the brink of closure amid the second wave of the pandemic. “Since March 2020, the industry has been struggling to manage its statutory and capital expenditure obligations. Without a moratorium on EMIs and interest payments, the sector will completely crumble…Our right to conduct business was taken away but the right to recover loans from us is being allowed. This is discrimination against our industry,” said Gurbaxish Singh Kohli, Vice President, FHRAI.

Also read: MSME credit gap: How Bitcoin, Ethereum, other crypto investors may address small business liquidity crisis

According to the industry figures highlighted by FHRAI, the hotel industry’s total revenue in FY20 was Rs 1.82 lakh crore while around 75 per cent (over Rs 1.30 lakh crore) of FY21 revenue is estimated to be wiped off. As per the data, on the deployment of gross bank credit to the hospitality sector, from the Reserve Bank of India’s April bulletin, the outstanding amount for tourism, hotels, and restaurants as of February 26, 2021, stood at Rs 48,102 crore, up from Rs 45,184 crore as of February 28, 2020.

“Due to financial losses, 30 per cent of hotels and restaurants in the country have shut down permanently and about 20 per cent haven’t opened fully since the first lockdown. The remaining 50 per cent continue to run in losses and revenues are below 30 per cent of the pre-Covid levels. The financial institutions have marked the industry in the negative list,” said Pradeep Shetty, Joint Secretary, FHRAI. The association urged the government to ask the RBI for interest on loans at fixed deposit rates along with 2 per cent for all loans taken by the sector. According to FHRAI, the tourism and hospitality industry accounted for around 10 per cent of India’s GDP, supported around 90 million jobs, and generated Foreign Exchange Earnings (FEE) to the tune of Rs 1,94,881 crores in 2019.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.