Hotels and restaurants body Federation of Hotel & Restaurant Associations of India (FHRAI) in a representation to Prime Minister Narendra Modi has pleaded for specific fiscal measures to rescue the hospitality market from extreme Covid effect. 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 3-year moratorium extension on all loans, total waiver on the interest of loans from March 2020 till the time companies are normalized, and a stimulus package for the industry’s working capital needs.
Hospitality has been amongst the sectors which includes aviation, realty, retail, and so on., that have taken extreme Covid beating. As per market estimates, a majority of the hospitality sector, which comprises micro and tiny-sized hotels and restaurants, has witnessed revenues plunging with various 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,” stated Gurbaxish Singh Kohli, Vice President, FHRAI.
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According to the market figures highlighted by FHRAI, the hotel industry’s total income in FY20 was Rs 1.82 lakh crore although about 75 per cent (more than Rs 1.30 lakh crore) of FY21 income is estimated to be wiped off. As per the information, on the deployment of gross bank credit to the hospitality sector, from the Reserve Bank of India’s April bulletin, the outstanding quantity 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,” stated Pradeep Shetty, Joint Secretary, FHRAI. The association urged the government to ask the RBI for interest on loans at fixed deposit prices along with 2 per cent for all loans taken by the sector. According to FHRAI, the tourism and hospitality market accounted for about 10 per cent of India’s GDP, supported about 90 million jobs, and generated Foreign Exchange Earnings (Charge) to the tune of Rs 1,94,881 crores in 2019.