TravTalk India Online Magazine
The FHRAI has requested the FM for urgent measures to save the hospitality sector. It has asked for a moratorium on loans and a special resolution framework for the restructuring of loans, along with a minimum one-year moratorium extension for loans availed under ECLGS.
The Federation of Hotel & Restaurant Associations of India (FHRAI), an association of hotels and restaurants, has submitted a representation to Union Finance Minister Nirmala Sitharaman requesting urgent special measures for the survival of the sector. It has asked for a moratorium on loans taken by the tourism and hospitality sectors and a special resolution framework for restructuring of the loans, along with a moratorium extension of at least one year for loans availed under the Emergency Credit Line Guarantee Scheme (ECLGS).
Among other measures, FHRAI has requested working capital support with a guarantee from the Central Government to banks and NBFCs. It has asked that the `60,000 crore Loan Guarantee Scheme for the COVID-affected sector be notified with immediate effect, and lastly, it has demanded a direct benefit transfer of basic pay to employees of the hospitality sector.
FHRAI has also submitted a representation to Prime Minister Narendra Modi requesting urgent attention towards the deteriorating situation of the hospitality and tourism sectors. Gurbaxish Singh Kohli, Vice President, FHRAI, says, “We are presently in the midst of the third wave and the industry just will not be able to sustain another storm. In anticipation of the extent of losses and to merely be able to survive the repercussion of the third wave, we request the FM to immediately announce special measures for us. As the sector was inoperative due to restrictions, it is not in a position to repay loans already taken. Our foremost request is for a moratorium of minimum one year for repayment of loans along with interest for the hospitality industry. In addition to this, we request that in view of the unparalleled situation of the tourism and hospitality sector, another round of resolution framework be announced for the sector for restructuring of its loans.”
FHRAI has stated that the financial loss to the industry from the preceding two Covid waves caused around 30 per cent of hotels and restaurants to shut down permanently. The remaining establishments continue to run at losses even today. The industry has reported losses of `1.40 lakh crore and around 50 million jobs were lost due to
the pandemic.
“With one more tourism and business season washed off, the sector has nothing to hope for. It is staring at a dark future in the midst of increasing debt burden, obligations and statutory liabilities but with no means or ways to meet them,” adds Kohli.
FHRAI has also requested that the working capital requirements of the hospitality sector be supported by the government with a long-term funding scheme with a low-interest rate and a guarantee from the Central Government to banks and NBFCs. It has once again requested to notify the `60,000 crore Loan Guarantee Scheme with a 100 per cent government guarantee and long-term repayment options to address the colossal damage suffered by the tourism and hospitality sectors. “So far, the Ministry has not released any operational guidelines nor any other details about the scheme,” adds Kohli.
