Nearly a week following the Reserve Bank of India had announced separate liquidity help of Rs 15,000 crore with tenure up to 3 years for the make contact with-intensive sectors such as hospitality and ancillary services till March 31, 2022, the sector has now reached out to the Tourism Minister Prahlad Singh Patel and MSME Minister Nitin Gadkari to advocate “immediate fiscal measures to save it from imminent collapse,” the apex hospitality association Federation of Hotel & Restaurant Associations of India (FHRAI) stated on Wednesday. “Hotels’ recovery would take at least three years after everything gets back to normal and travel is fully allowed. It would be juvenile to think about recovery in the coming few months of unlock to reach the pre-Covid levels. Even if people start eating out and travel, it would not compensate for the 1.5 years of closure. Restaurants will take 1.5 years to recover if there are no restrictions and no social distancing norms. The sector has a large portion of MSMEs,” Gurbaxish Singh Kohli, Vice President, FHRAI told TheSpuzz Online.
In a representation submitted on Tuesday, FHRAI has asked for a sector-distinct stimulus package which includes full waiver of interest on loans, extension on a moratorium of 3 years on the principal quantity for all loans, and month-to-month fundamental salaries to workers of hotels and restaurants who lost their jobs amid pandemic. Among other important asks had been expediting payments due towards the sector below Service Exports from India Scheme (SEIS) and IT refund, waiver of secondary situation on typical foreign exchange earnings Under Export Promotion Capital Goods (EPCG) Scheme and treating payment from foreign vacationers in INR as forex earning, bringing the tenor of ECLGS 1. and 2. at par with the tenor of ECLGS 3., and lastly, removing Rs 50 crore cap Under the unique restructuring window and the situation requiring accounts classified as typical as of March 31, 2021.
“We still welcome the RBI’s liquidity support them but we want further clarity on the support. We want the government to pay basic pay to employees. We have not received any money back under the SEIS scheme. The least they (the government) could do at a time like this is to give that money to help businesses with cash flows. You cannot prepare the industry for losses due to the pandemic. You can only prepare for the protocols required to fight it. If there is a third wave, there would be more shutdowns and job losses,” added Kohli.
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The hotel and restaurant sector’s total income in FY20 was Rs 1.82 lakh crore of which about 75 per cent as per FHRAI estimates was wiped off in FY21. This is more than Rs 1.30 lakh crore income hit for the Indian economy. The total loan outstanding to the hospitality sector was more than Rs 60,000 crore presently, the body added. Due to economic losses, 40 per cent of hotels and restaurants in the nation have shut down permanently and about 20 per cent haven’t opened completely considering the fact that the initially lockdown whilst the remaining 40 per cent continue to run in losses, it added. The government had in April this year announced ECLGS 3. to cover enterprises in hospitality, travel & tourism, leisure & sporting sectors and extended the general emergency credit scheme which includes the earlier two versions by 3 months from March 31, 2021, till June 30, 2021, or till guarantees for the whole Rs 3 lakh crore quantity are issued. The scheme was later extended till September 2021.
“The (ECLGS) funds available are not substantial. It has come too late as there is hardly any money left but one should wait for detailed guidelines. However, it makes for a good deal at least for people to repay loans after two years as they can make barely any money to repay currently,” Pradeep Shetty, Director, Maharaja Foods & Restaurants and Joint Secretary, FHRAI had told TheSpuzz Online.
Lenders below ECLGS have currently disbursed Rs 2.54 lakh crore to MSMEs of the Rs-3-lakh-crore ceiling, Sunil Mehta, Chief Executive Officer, Indian Banks’ Association (IBA) had told reporters on May 30 in a virtual press conference on the extension of the ECLGS scheme.