The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has strongly advocated for modifying banking guidelines to provide much-needed support to hospitality and tourism sector in flood-hit State of Uttarakhand.
“The Reserve Bank of India (RBI) may look at amending its circular for small and medium enterprises (SMEs), particularly for hospitality industry to give relief for second time restructuring of term loan/deferment of installments’/extension of moratorium period,” stated ASSOCHAM in a communication addressed to the Financial Services Secretary, Rajiv Takru.
“Hospitality and tourism together account for about one-fourth of Uttarakhand’s State domestic product apart from being a key source of employment and income generation from revenue perspective,” said national secretary general of ASSOCHAM, DS Rawat.
“The hospitality and tourism industry in Uttarakhand has sought intervention from policymakers in the Ministry of Finance, RBI and the Central Government as many players in the industry had availed bank loans for various projects and are now finding it difficult to repay them,” said Rawat. “As such the union government along with its key financial institutions should look at formulating a relief package for State’s hospitality and tourism industry in form of loan waivers, tax exemptions and subsidies,” he added.
Calling for State Government’s attention in this regard, the chambers’ national secretary general said, “Though rehabilitation of enterprises is done at the level of bankers/lenders, the State Government must compliment the efforts of these financial institutions by partnering in the process. The hospitality and tourism sector alone is likely to suffer direct loss of about 1.8 lakh jobs during the course of next six months, besides the sector is also likely to lose over Rs4,100 crore annually and it will hold back growth of tourism sector by at least five years,” states a recently released study titled ‘ASSOCHAM Prescription: Coping With The Impact of Disaster in Uttarakhand State.’
The State Government’s finances will also experience reduced tax revenues due to drop in goods and services’ production, loss of earnings and reduced consumer spending, added the study.“Hospitality and tourism sector is likely to be reduced by 75 per cent in the aftermath of devastation caused by unprecedented flash-floods and landslides as rate of cancellations shot by a whopping 50 per cent. Development of strategies for short, medium and long-term support for recovery of livelihoods, services and rehabilitation of infrastructure is the need of the hour,” said Rawat.
“Considering that it would take another three to four years to rebuild infrastructure in the affected areas, the Government must look at providing relief to the industry to enable them to sail through these tough times,” he stressed.