5 Crore Employees In Tourism Sector Can Be Fired; Rs 5 Lakh Crore Loss Expected
As per the reports, the coronavirus pandemic would have a debilitating impact on India’s tourism sector with the industry estimating an overall loss of Rs 5 lakh crore and job cuts for 4-5 crore people.
How Would This Affect?
According to the Confederation of Indian Industry estimates, the organized sector in the industry — branded hotels, tour operators, travel agencies which are the mainstay of the sector, maybe hit the hardest with an estimated loss of around Rs 1.58 lakh crore, apart from other losses.
As per the industry body, the branded hotel groups are set to lose as much as Rs 1.10 lakh crore, online travel agencies Rs 4,312 crore, tour operators (inbound and domestic) Rs 25,000 crore, adventure tour operators Rs nearly 19,000 crore and cruise tourism Rs 419 crore.
How Is The Tourism Sector Doing?
Further, the sources in the Union Ministry of Tourism said the government is considering helping the sector with soft loans, working capital and deferment on loan repayments.
Last month, the ministry itself, in a presentation to a parliamentary panel on transport and tourism, had pegged the losses at Rs 5 lakh crore, quoting industry estimates.
Apart from the organized sector, the tourism industry also gives employment to small homestays, bread and breakfasts and small hotel operators and their services will also take a major hit.
According to the national federation of 10 tourism, travel and hospitality organizations of India, FAITH, it was safe to say that the overall value of the losses could be in the range at Rs 5 lakh crore, covering all aspects of the business.
FAITH said, ¨The problem is that we have tourists who come into the country from October to March and there are people who travel within the country during summer holidays, pujas or in December and then there are people who go abroad.
“There is no one coming from outside. Our key source markets are heavily impacted due to coronavirus. We don’t anticipate the market to come back to India in the next 12-18 months,”.
What Can Be Done?
Citing the scenario, the FAITH CEO Ashish Gupta recommended a salary corpus for the sector from the government.
As per the World Economic Forum (WEF), the coronavirus pandemic is putting up to 50 million jobs in the global travel and tourism sector at risk.
As per the reports, out of the 50 million jobs that could be lost, around 30 million would be in Asia.
The CII National Chairman Tourism Committee, Dipak Haksar said, ¨The industry is facing an existential crisis today,”.
According to him “we estimate around 4-5 crore job losses of people who are directly or indirectly related to the tourism sector.”
The Travel and Tourism sector is facing a ‘lockdown situation’ with negligible demand of both international and domestic leisure and business traveler, he added.
Haksar said, “Occupancies in hotels have come to single-digit and recoveries not expected in the near future. The industry expects to lose over 2 crore jobs and revenue loss could be 60-70% this year. The tourism industry is gasping for oxygen and we urge the government to pronounce immediate sectoral relief for the industry,”.
What Does The Expert Suggest?
According to the CII, the industry will see cash flows only beginning to improve in November 2020 and perhaps get to normal levels by early 2021.
Also, Haskar recommended short-term interest-free or low-interest loans for rebuilding business, 12-month deferment of all statutory dues and a moratorium of an additional three to six months on all working capital principal, interest payments on loans and overdrafts.
According to him, these steps, among other sops for the industry, would bring in liquidity, allowing for business continuity.
As per the data, last year, 10.89 million foreign tourists arrived in India, while the number was 10.56 million the year before and 10.04 million in 2017.
With the lockdown, travel restrictions in place and the fear of the pandemic spreading, in February 2020, 1.01 million foreign tourists arrived in India compared to 1.08 million in February 2019, registering a year-on-year decrease of 6.6 percent already.
This seems to be the sharpest decline since 2015 and also the first in the month of February.