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'Even Cinderella had a fairy godmother, tourism is still waiting for one!'

BUDGET 2000

Ravi Bhoothalingam

The Budget could have done much more to stimulate savings as well as investment. An opportunity has been lost to place India on a rapid growth track.

If India were regarded as an internationally attractive investment destination, for instance, through announcing an aggressive privatisation programme, inputs of foreign capital would have been available in large measure. This would be particularly relevant for capital intensive areas such as infrastructure, hotels etc.

An increase of business as well as leisure visitors would have followed such investments. This has not happened. On the other hand, the industry is facing the impact of a phased taxation on its export profits. This will definitely impact on the short and medium term prospects of the industry.

Even Cinderella had a fairy godmother, the tourism industry is still waiting for one! The Budget does not mention tourism at all! This is despite the fact that tourism generates nearly Rs 130 billion as foreign exchange (netted after imports). If there had been a strong thrust on infrastructure as well as indications of a strong privatisation programme, business tourism would have picked up. It is now doubtful to what extent this will happen.

As for leisure tourism, unless the infrastructure is improved, prospects will remain well behind India's great potential. With the tax on exports, the hotel industry's capability to invest and grow will also be adversely affected.

Tourism is not mentioned even once in this Budget, which seems to indicate its priority with government. This is despite the fact that it is the largest net foreign exchange earner. Worldwide, tourism, along with software, have been identified as the leading growth industries. So it is disappointing that it figures nowhere in the Budget.

The dividend tax will definitely have an impact on the dividend distribution policy of all companies, whether they have cross holdings or not. We had hoped that this Budget would facilitate the process of corporate mergers, de-mergers and restructuring. At first glance, there is nothing in the Budget which removes the present cumbersome procedures and impediments to the above.

I am disappointed with the Budget as it has phased out the exemption of tax on profits, and also not provided any specific measures which will promote business or leisure tourism. For example, a strong focus on infrastructure and also a time bound privatisation programme would have stimulated foreign investment which would lead to inbound travel. So the extension of a tax holiday for new hotels is a small oasis in an otherwise dry desert.

Briefly:
1. We have a great constraint on air seat capacity into and out of India, especially in the winter. Just try and get a London-Delhi ticket for 26th January! You will have to book it at least six months in advance.

2. Complicated visa procedures. Most tourism destinations have very simple systems of visa on arrival, if indeed they require visas at all.

3. In France, the infrastructure at monuments and places of tourist interest are clean and kept well. Ancillary services like money-changing, taxis and airport services are generally prompt and polite. In India, we have a long way to go.

4. Airfares to India are very high, and this does not help the already difficult availability situation mentioned earlier.

Finally, India as a country does not market and promote its great potential. We spend pitifully little as compared to even small countries like Sri Lanka and Thailand.

Ravi Bhoothalingam is President, Oberoi Group.

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