New Delhi: The government has cut the allocation for the tourism ministry in the current financial year by about a fifth amid a fiscal crunch, in line with similar reductions in other areas.
The tourism allocation for the fiscal year that ends 31 March has been cut to Rs.950 crore from Rs.1,210 crore, said two officials with knowledge of the subject. Neither wanted to be named.
“We all have to recognize that there is a finance crunch and government has to take a stand on correcting fiscal deficit. For 2012-13, we are getting some Rs.950 crore,” said one of the two officials cited above.
They said the cut will impact the sector, as well as fund disbursements to states.
Growth in foreign tourist arrivals slowed to 5.4% in 2012 from 9.2% in the previous year, according to tourism ministry data. Foreign exchange earnings from tourism also slowed to 7.1% from 16.7%. Foreign exchange earnings from tourism amounted to $17.47 billion in 2012 compared with $16.56 billion in 2011.
Industry experts said the allocation was already low and reflected the lack of attention being paid to a sector that had the potential of being able to generate substantial revenue.
With 6.29 million in-bound tourists in 2011, India is ranked at 38 as a global destination. China is at number three, trailing France and the US, with 57.6 million foreign tourists, government data show.
“If this (allocation) goes down further, it might have an adverse impact on progress of infrastructure projects, which are financed by the tourism ministry,” said Subhash Verma, president of the Association of Domestic Tour Operators of India lobby group.
Projects may get delayed or put on hold because of the fund shortage.
“In that case, the money that has been spent already would be stuck or wasted. The new project might not get initiated because of poor financial governance,” Verma said.
The officials cited above said the finance ministry has told the tourism ministry about the need to rein in the deficit. As part of the effort, the tourism ministry is planning to remove the bottlenecks in expenditure and seek utilization certificates from all parties, including states, before further disbursement of funds.
“Generally, we give 80% of the allocated funds as the first instalment and now, in a changed environment, that may change. Instead of releasing the bulk of the fund, we are planning to release it in three or four instalments,” said the second official. Since the finance ministry now focuses on “just utilization” of allocated funds, a staggered approach was more appropriate—“maybe not more than 30% in one instalment,” the official said.
Finance minister P. Chidambaram has said that at the end of the current financial year, India will have a fiscal deficit of 5.3% of the gross domestic product which he wants to cut to 4.8% next year.