On tourism, govt's heart is in the right place. Where's the money though?

While many neighbours in Asia have already caught up on their inbound tourist traffic, India still lags behind its 2019 numbers. On Saturday, finance minister Nirmala Sitharaman ​reassured the sector and unveiled an ambitious tourism vision in the Budget for 2025-26, reaffirming a 2023 pledge to develop 50 new destinations as engines of economic growth and employment. However, a closer look at the budget painted a more nuanced picture, with stagnant allocations and underutilized funds.

The budget had proposed an allocation of ₹2,430 crore for the sector for FY26, a modest rise from ₹2,374 crore the previous year. Of this, the Swadesh Darshan scheme—which funds tourism infrastructure development—received ₹1,900 crore, up from ₹1,750 crore, though only ₹350 crore was actually spent last year. Launched in 2014-15, this scheme provides financial assistance to state governments to improve tourism infrastructure.

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Similarly, the PRASHAD (Pilgrimage Rejuvenation and Spiritual, Heritage Augmentation Drive) scheme, aimed at developing pilgrimage sites, retained its ₹240 crore allocation, yet just ₹100 crore was utilized.

The Budget has drastically cut funding for several key initiatives, including the ‘Incredible India’ campaign, which promotes India as a global travel destination. The budget for overseas promotion has been slashed by 90%, dropping to just ₹3.07 crore in FY26 from ₹33 crore in FY25. In contrast, in FY24, actual spending on the campaign exceeded its allocation, reaching ₹47.99 crore.

"It is shocking that the budget for overseas tour promotions has yet again been reduced. It is really surprising that on one side the government is extolling the contribution of the tourism sector to the economic growth of the country and employment generation and on the other hand, it is just allocating a peanut budget to promote the country abroad," Rajiv Mehra, general secretary of the Federation of Associations in Indian Tourism & Hospitality (FAITH), emphasized that lower borrowing costs will help reduce project expenses and drive hotel development.

Government funding for overseas tourism promotions (Incredible India) has been declining over the years, to ₹167 crore for FY24 from ₹524 crore in FY22 and ₹341 crore in FY23. In fact, the campaign has been offline altogether since the pandemic. In February 2024's interim budget, the amount was reduced to ₹3 crore but later in July, India increased it to ₹33 crore, up from ₹3 crore proposed earlier. This year, it is back to ₹3 crore.

Domestic tourism promotion has also seen cuts, with allocations falling to ₹136.9 crore from ₹176.97 crore in FY25, despite ₹90 crore being spent last year.

Develop global tourism hub 

While there was a strong intent of the government to focus on tourism infrastructure, Deep Kalra, chairperson of The World Travel and Tourism Council, India Initiative (WTTCII), said from an industry perspective, there was a "strong expectation" for an enhanced international marketing budget to support India’s growing ambitions as a global tourism hub.

"Global tourism is witnessing a robust rebound and India’s international visibility is crucial to attract high-value travellers. There is an urgent need for an empowered, strategically driven tourism board here to amplify our global footprint. Such a body can spearhead effective branding, strategic partnerships, and targeted marketing to position India as a premier year-round destination on the world tourism map," he said.

A lot of interesting schemes have been announced but from a tourism standpoint, this is not a great budget, Subhash Goyal, chairperson of Delhi-based STIC Travel Group told Mint.

"These 50 tourist sites were announced two years ago but no work has been done on them yet. While it's great that the UDAN scheme will connect over 100 new destinations to each other, airfares are skyrocketing during events like Maha Khumbh, which travellers have been lamenting about," Goyal said.

Fifty new tourist destinations

The government announced that hotels in the 50 newly identified tourist destinations will be included in the harmonized infrastructure list, a move aimed at enhancing travel standards and improving accessibility. This classification will make it easier for hotels and tourism-related businesses to secure low-cost loans, foreign borrowings, and long-term funding from insurance companies, pension funds, and the India Infrastructure Financing Co. Ltd (IIFCL).

“These measures will significantly boost investment in the sector," said K.B. Kachru, president of the Hotel Association of India (HAI) and chairman emeritus of Radisson Hotel Group, South Asia.

With the UDAN scheme expanding air connectivity to 120 destinations, coupled with the development of 50 new tourist hubs, the tourism and hospitality sector stands to benefit greatly. 

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Mint reported last week that the association had sent representations to the government that investment in the development of hotel rooms be encouraged as a crucial part of the country's tourism infrastructure, by including hotels in the harmonised list. The Federation of Associations in Indian Tourism and Hospitality (FAITH) also advocated greater access to credit.

Since tourism is a state subject, the Union government will work with state administrations to build infrastructure and generate local employment opportunities. The National Tourism Policy, 2023, had previously committed to developing these destinations under the "Tourism in Mission Mode" initiative. In March 2023, the government identified locations such as Pathiramanal Island in Alappuzha, Kumarakom, and Kozhikode (Beypore) in Kerala for development.

While the renewed commitment to 50 destinations is a positive step, industry leaders stress that implementation will be key in translating these announcements into real-world growth for the tourism sector.

Budgets slashed

The budget for training institutes—which support Hotel Management & Catering Technology, Food Craft Institutes, and the Indian Culinary Institute —has been reduced from ₹50 crore in FY25 to ₹35 crore this year.

Additionally, the ‘Safe Tourist Destination for Women’ scheme has been nearly wiped out, with its funding slashed from ₹5 crore in FY24 to just ₹1 lakh this year.

These cuts raise concerns about the government's commitment to strengthening the tourism sector, especially in areas of international promotion, workforce development, and traveller safety.

Jyotsna Suri, vice chairperson of WTTCII and chairperson and managing director of Bharat Hotels Ltd which runs The Lalit, added, “To truly harness India’s global tourism potential, there is a need for more targeted interventions in areas like international tourism promotion, aviation sector resilience and development of international cruise tourism around India’s 7,500 km coastline."

E-visas to be streamlined

While further details are awaited, the Budget announced measures to simplify travel procedures, including streamlining e-visa facilities for specific tourist groups and relaxing visa norms to promote medical tourism. Additionally, states will receive incentives based on their effectiveness in managing destinations, though clarity is needed on which locations will benefit.

The hospitality industry remains optimistic about the government's tourism push. “These announcements for the sector are all solid enablers. Moreover, the enhanced limits on personal income tax should lead to increased consumption and fuel travel," said Sanjay Sethi, CEO of Chalet Hotels Ltd.

To encourage homestays, the government will extend MUDRA loans under the Pradhan Mantri Mudra Yojana (PMMY), providing financial backing for micro and small hospitality enterprises.

There is a glimmer of hope though. Operators hope there will be a strategic focus on medical and Buddhist tourism which could attract new international visitors, in the coming years. The government highlighted a key focus will be on Buddhist tourism, with efforts to develop destinations linked to the life and legacy of Lord Buddha. The government also aimed to position India as a global hub for medical tourism under its "Heal in India" initiative, through public-private partnerships.

The Buddhist circuit could drive additional inbound travel from neighbouring countries with large Buddhist populations, said Kachru.

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Despite these efforts, India's tourism recovery remains slower than pre-pandemic levels. Foreign exchange earnings (FEE) from tourism reached $28.07 billion in 2023, but international arrivals (7.6 million from January to October 2024) remain below the 2019 peak of 10.9 million. The government’s long-term Tourism Vision 2047 targets 100 million foreign visitors, but bridging this gap will require sustained investment and policy execution.