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FHRAI hails ECLGS, says FM’S package has nothing specific for hospitality
Thursday, 19 November, 2020, 08 : 00 AM [IST]
Our Bureau, Mumbai
The Federation of Hotel and Restaurant Associations of India (FHRAI) while welcoming the extension on Emergency Credit Line Guarantee Scheme (ECLGS) announced by Finance Minister Nirmala Sitharaman, has expressed disappointment on not being offered a hospitality-specific stimulus package. The FHRAI has stated that the ECLGS is merely a timeframe extension on an existing scheme and does not do much good for the distressed hospitality sector. The ECLGS has been extended until March 31, 2021, and along with it the tenor of credit has been extended to five years, including one-year moratorium on principal repayment.

Gurbaxish Singh Kohli, vice president, FHRAI, said, “The ECLGS is the only respite that the hospitality industry has received from the government so far. We cannot stress on this enough, that hospitality is not like other industries. It is highly capital- and labour-intensive and without a specific and robust stimulus, the sector will continue to bleed. Travel, tourism and hospitality are the worst affected sectors, not only in India but across the world. We are at a loss of words to express our distress and disappointment. Yes, the extension on the ECLGS is a welcome relief but the industry can’t be revived with just this benefit alone.”

The FHRAI has also pointed out that the extension offers only a marginal benefit to the industry. The industry has instead pinned hopes on the FM making sector-specific tweaking to allow hospitality establishments to benefit from loan restructuring.

Pradeep Shetty, joint Secretary, FHRAI, said, “This is our biggest sore point. The government has allowed businesses to avail loan restructuring to help them recover from the hit they took during the lockdown. The hospitality industry too is eligible for it, however; the banks are reluctant to service us. This is because our business, unlike businesses in other industries, is seasonal. We are a thriving business during holiday seasons and we lay low for the rest of the year. A normal course of business for us is seen as bad business in the book of accounts by the banks. A mere extension, without addressing the lack of implementation and apathy of the banks is pointless.”

“Our product is perishable, unlike in other industries where inventories can be maintained to be sold later. An unoccupied hotel room or an empty table at a restaurant is a direct loss. Hospitality establishments are struggling due to uncertain business conditions on account of restriction on Foreign Tourist Arrivals (FTAs), shortage of labour, apprehensive domestic travellers; Work from Home culture and most importantly, with no access to working capital. We are stuck in this catch 22 situation which unfortunately, is making our sector’s recovery extremely difficult,” added Shetty.

“The industry was forced to shut shop by the inaction and indifference of the government but now is being expected to hire more people. The hospitality industry is the highest employment generator and we would be happy to add even more to our workforce but we need the government’s support for it. At present, we are struggling to pay the salaries of even our existing employees. The FM’s latest package is clearly not for us. Post-unlock, the industry is trying to get back on its feet and an extension on ECLGS is all we have got so far from the government. We once again request the government to understand the industry’s fragility at present and offer us the much-needed support,” concluded Kohli.
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