Indian Market & Trends

BUDGET 2016-17: Not much for the travel sector


There was not much in finance minister Arun Jaitley’ Budget for fiscal 2016-17 for the travel industry apparent from the fact that he used the word travel two times and tourism just once in his entire speech. (Industry reaction here)

Apart from a few stray announcements related to the development of airports and infrastructure, the FM also did not make any big ticket announcements on GST or allocate more monies to tourism related schemes on the lines of PRASAD and SWADESH DARSHAN. Here is a snapshot of measures that could possibly have more long term and indirect effect on India’a travel sector going forward.

Infrastructure outlay at Rs 2.18,000 crore: “The total outlay for infrastructure development stands at ₹2.21 lakh crore in FY17,” Jaitley said. He arrived at the figure by adding announcements made by his colleague Railways minister Suresh Prabhu for developing rail infrastructure.

From the sum total of ₹2.21 lakh crore, ₹55,000 crore would be be the budgetary allocation for development of roads along with the NHAI raising ₹15,000 crore through government bonds for the same purpose making it  a sum total of Rs 70,000 crore for the fiscal 2016-17. He added that if one add the allocation for the Gram Sadak Yojana, the outlay for roads then adds up to ₹97,000 crore for fiscal 2017.

Jaitley said that the government’s aim was to build 10,000 kms of national highways in fiscal 2017 with added upgradations for 50,000 kms of state highways.  “Nearly 85% of the stalled road projects have been put back on track,” he added.

The FM also said that ₹800 crore were allocated for port development in FY17.

Passenger bus permits. Among a major announcement was the plan to permit private passenger bus players to operate transport fleets across state lines.  “I plan abolition of Permit-Raj in public transport system. Private players will be allowed to operate fleet services,”  said Jaitley adding that the move will open up the area for the creation of more jobs. “Entrepreneurs would be able to roll out their companies’ services subject to safety and efficiency norms,” he said.

Civil Aviation: “In civil aviation, 160 non-functional airports to be developed at a cost of ₹50-100 crore each and 10 of 25 defunct airstrips to be developed in partnership with state government,” said Jaitley. He added that such development would be part of the low-cost airport development plan with minimal frills to keep the cost of flying low.

Swachh Bharat Abhiyan:  “We have introduced ranking of urban areas in sanitation which has resulted in constructive competition among towns and cities,” said Jaitley. He gave ₹9000 crore to the pet project for the Prime Minister Narendra Modi noting that the deadline for the same was due in 2019. 

More money for new travel startups: 100% tax exemption for startups if formed after April 2016 could potentially be a source of much joy for fledgling travels startups looking for their big break. Also, if your small travel business does not have revenues beyond ₹2 crore, you would be able to save on the cost of a full audit and pay presumptive tax at 8%.

A little money for the traveller: While the FM did not raise the basic tax emeption limit, those living in rented houses and not getting an HRA from their companies can now claim exemptions for ₹60,000 crore from ₹24,000 cr at present. And when you are making your travel Budget every penny counts!

More free bags for international travellers? The customs Baggage Rules for international passengers are being simplified so as to increase the free baggage allowance “The filing of baggage declaration will be required only for those passengers who carry dutiable goods,” said Jaitley.

Musafir Namah Bureau


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