Stating that foreign tourist arrivals increased to 3.92 million in 2005, Finance Minister P Chidambaram made it clear in his Budget speech that this was still a fraction of India's potential.
"During 2006-07, the tourism ministry will take up for development 15 tourist destinations and circuits following an integrated area development approach," he said.
The Budget also stated that 50 villages with core competency in handicrafts, handlooms and culture, close to existing destinations and circuits, will be developed for enriching tourists' experience.
Rajji Rai, secretary general, Travel Agents' Association of India, welcomed the mention of tourism in the Budget and the lowering of fringe benefit tax. However, he felt much more should have been done.
The increase of service tax from 10 per cent to 12 per cent, barring the economy class air travellers, was going to "directly hit the corporate traveller".
Rai added that the completion of the Golden Quadrilateral would help domestic tourism improve its growth from 16-20 per cent per annum to 20 per cent per annum.
However, though the finance minister spoke of improving the infrastructure of roads, he neglected the potential of hotels - five-star or budget- being developed along the highways. This was surprising considering the country was short of 100,000 rooms, he said.
Bharat Hotels chairman and managing director Lalit Suri too said he was disappointed that there was no mention of this in the Budget.
Subhash Goyal, president, Indian Association of Tour Operators, described the Budget as "thoroughly disappointing".
Far from conceding IATO's demand for 90 per cent reduction in service tax, the finance minister had actually increased it. Goyal was also unhappy over what he called the discriminatory nature of the service tax.
"If a traveller books his tour with a foreign operator overseas, he is exempted from service tax. However, if the traveller books with an Indian operator, this tax comes into play," he said.
Goyal called for a meeting of all members on March 4 to decide AITO's course of action against the Budget. He hinted that Minister of Tourism Ambika Soni might make an appearance at this meeting.
Arup Sen, executive director, Cox&Kings, said even though the start of four new hospitality schools was good news, the government should also concentrate on travel professionals and set up institutions for guides who were trained before they joined the industry rather than get trained "on-the-job".
Ashok Bhatnagar, head of Kuoni Academy For Travel, considered the allocation of Rs 830 crore for tourism as "minuscule" as this sector had the potential of adding 10 million jobs in the next five years, directly or indirectly. Even though most of the Indian ports were far from being passenger friendly, the government was planning to introduce service tax on cruises.
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