In November, the Indian Government announced that 500 and 1,000 rupee notes would no longer be considered legal tenders, effective immediately. The objective was to curb corruption, the shadow economy and counterfeiting. But the markets also feared that the move could dislocate legitimate economic activity, especially in the short-term given that close to 90% of India’s economy operated on a cash basis.
DELHI: India’s business travel spends continue to grow at a double digit pace despite the feared fallouts from the Modi Government’s demonetisation move said the Global Business Travel Association (GBTA) latest GBTA BTI™ Outlook – India report, a semi-annual analysis that track’s India’s business travel market.
Gaurav Sundaram, GBTA India regional director said, “Despite fears surrounding the demonitization efforts, India saw a 10.9 per cent growth in year-over-year business travel spending for the second quarter of 2016 – even higher than our last report projected.”
GBTA projects India will become the 6th largest business travel market in the world by the end of 2019. It forecast 11.4 per cent growth in business travel spending in 2016 and 11.6 per cent growth in 2017 taking the Indiann business travel market to $36.8 billion.
GBTA added that India continues to climb the world rankings of business travel markets, moving up five spots during the early 2000s to become the 10th largest global business travel market at the end of 2015. Forecasts also predicted India would pass Brazil last year and will likely surpass both South Korea and Italy in the coming year.
The India outlook added that with 7.3 per cent year-over-year growth in 2016 Q3 GDP, India remains the fastest major growing economy in the world. Currently the WEC’s Global Competitiveness Report ranks India 74 out of 140 countries for infrastructure. GBTA we expect India’s ranking to continue to improve as the country continues to invest in its infrastructure.
It added that the construction of new hotels has been burdened by high rates of taxation and long approval processes, but the situation is improving. It remains to be seen if reforms can move fast enough to keep up with the rising demand for hotel rooms.
GBTA forecasts domestic business travel spending will continue to grow at consistently high rates, 12 per cent for 2016 reaching $33.8 billion. It is projected to grow at 11.8 per cent in 2017. India’s international outbound (IOB) business travel spending showed subdued growth in the 5-6 per cent per year range.
GBTA revised its IOB forecast for 2016 upward from 3.1 per cent projected previously to 5.4 per cent though. For 2017, it said that the IOB spending could rise by 9 per cent with commodity prices having bottomed out increasing prospects for increased trade activity, especially with the oil-rich MENA region.
Musafir Namah Bureau