Hospitality industry calls for loan moratorium and capital support in 2022 budget

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Hospitality industry calls for loan moratorium and capital support in 2022 budget

New Delhi: Hospitality industry body FHRAI said on Tuesday it had asked Finance Minister Nirmala Sitharaman to consider a moratorium on loans taken by industry players and a special resolution framework for loan restructuring in the framework of immediate measures to support the industry in the grip of the pandemic.

In a representation submitted to the Minister of Finance, the Federation of Hotel and Restaurant Associations of India (FHRAI) has also requested the extension of the moratorium for at least one year for loans issued under the guarantee scheme. Emergency Line of Credit (ECLGS), citing successive waves and continued disruptions have created a volatile economic environment in the sector, making survival the primary focus.

In addition, FHRAI said it has requested working capital support from Sitharaman with a guarantee from the Center to banks and NBFCs.

He also demanded that the Rs 60,000 crore loan guarantee scheme for the COVID-affected sector be notified with immediate effect and that there be a direct transfer of base salary benefits to employees in the hospitality sector.

The sector’s demands precede the 2022-23 Union budget, which will be presented to Parliament on February 1.

Commenting on the industry demands, FHRAI Vice President Gurbaxish Singh Kohli said, “We are currently in the midst of the third wave and the industry simply will not be able to weather another storm. In anticipation of the scale of the losses and of surviving the repercussions of the third wave, we are asking the Minister of Finance (FM) to immediately announce special measures for our sector.”

With the sector inoperative due to the restrictions, he said he was unable to repay loans already taken out.

“Our main demand is a moratorium of at least one year for the repayment of interest-bearing loans for the hotel industry. In addition to this, we ask that in view of the unprecedented situation in the tourism sector and the hotel industry, another framework resolution round will be announced for the sector to restructure its loans,” Kohli added.

The hospitality industry has been badly affected since the pandemic hit the country in early 2020 with the first lockdown and restrictions bringing the sector to a standstill for almost eight months, he said, adding that the he industry was hoping for a recovery after November 2020. , the second wave of April-May 2021 completely deflated business and industry hope.

In its representation, the FHRAI said the financial loss suffered by the industry during the previous two waves had resulted in the permanent closure of about 30% of hotels and restaurants.

“The remaining establishments continue to suffer losses even today. The hospitality industry has reported losses of a whopping sum of Rs 1.40 lakh crore and around 50 million jobs have been lost due to the pandemic” , did he declare.

Under the current circumstances, Kohli said, “We are asking FM to provide the industry with a moratorium extension of at least one year for loans under the ECLG program.”

The repayment schedule for loans under ECLGS 1.0 and 2.0 has started in most cases, but unfortunately these institutions do not have the cash to repay the loans due to the poor situation in the sector, he added.

Stating that there had been no activity or revenue for the sector for almost ten months the previous year, Kohli said: “The current surge in cases has worsened conditions in the sector.”

Seeking government support for the working capital needs of the hospitality sector, the FHRAI stressed the need for a long-term financing program with a low interest rate and central government guarantee to banks and NBFCs.

The industry body further said it has again requested to notify the Rs 60,000 crore loan guarantee scheme with 100% government guarantee and long-term repayment options “with immediate effect. as an effective measure to address the colossal damage suffered by the tourism and hospitality sector in the country”.

Calling for government support for workers in the sector, Kohli said: “A direct transfer of wages will support the livelihoods of millions of people until normality is restored to the sector. Since trained and quality manpower plays a predominant role in the tourism and hospitality sector, this support is very vital in restarting and reviving Indian tourism.”



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