SMEs in tourism & hospitality industry beseech government for credit support

Thrashed by the second wave of pandemic, a bevy of small and medium enterprises turn to government seeking financial support. Last month Center had extended the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) to help them recover.

Of all the calamities that befalls various industries in the rule of pandemic, tourism industry stands apart. In order to provide the cushion to the  sector, the government had announced the launch of ECLGS 3.0 in March to cover enterprises in hospitality, travel & tourism, leisure & sporting sectors but they seek further support.

The Hotel Association of India (HAI), a body which represents members having properties including 2-star and below to 5-star has written to the Finance minister Nirmala Sitharaman concerning the need to rationalize ECLGS as hotels have a high percentage of fixed costs of operations and they are highly capital intensive entities hence the situation is unsustainable due to nil or negligible revenues.

Moreover, HAI is of the opinion that recovery of hotels will also be long drawn as borders will be reopened with extreme caution and traveler confidence will return over an extended period of time.

Apart from this the association has suggested to increase the delinquency period, Inclusion of State Financial Corporations, Asset Reconstructions Companies (ARCs) and Debt Funds, extension of the moratorium, capping of interest rate at 8 percent.

Tourism is not just the quickfire source of foreign exchange, but it’s an integrated part of a nation’s economy as there are many other local industries like food, art and culture are directly linked with it. The regions where tourism is too dominant, they should explore the alternative source of revenue to keep the domestic economy afloat  sooner as possible.

Cover image by Travel Triangle