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Thursday,20-January-2022

Business

Hotels prepare to re-open, 50% may shut permanently

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With hotels and restaurants preparing to reopen for business after nearly four months, the prospects of around 50 per cent of them shutting permanently also loom large, top players warn.

The Centre has indicated July 8 as the target date for the hospitality industry to throw open its doors to guests and patrons, but there is no clear signal yet from the Maharashtra government.

“The situation is bad and getting desperate daily. Till June 30, the hospitality industry piled up around Rs 1.25 lakh crore losses. Many hotels and hospitality chains have expressed inability to continue operating partially or fully,” Gurbaxish Kohli, Vice-President of the Federation of Hotel & Restaurant Associations of India, told IANS.

“The proposed reopening is welcome but delayed. Initially, around 35 per cent of the industry will shut and by the year-end, this could go up to 50 per cent,” an equally worried Indian Hotel & Restaurant Association President Shivanand D. Shetty told IANS.

Both rue that despite the hospitality sector contributing 10 per cent to the national gross domestic product (GDP) and accounting for 12.50 per cent of jobs, “the industry has been completely ignored” by the government.

A delegation of the hospitality industry met Chief Minister Uddhav Thackeray on Sunday but returned without a final commitment on the reopening date, though the government has prepared a set of mandatory SOPs.

“We understand one-third occupancy and restarting restaurants for guests within the premises may be permitted. The fate of standalone restaurants will be decided separately. But more delays will impact our very survival,” Shetty said.

Kohli said there were 53,000 hotels in the regulated sector, and a similar number in the unorganised sector, which impacted revenues of the recognised industry.

Besides, there were around 5,00,000 eateries, encompassing all outlets — from roadside dhabas to the restaurants and big chains, which would be hit by the 50 per cent closure, Shetty said.

The situation was alarming even in Maharashtra where over 1,00,000 big and small restaurants would shut, entailing a major disaster in the form of over 5,00,000 job losses, said Hotels & Restaurants Association of Western India (HRAWI) spokesperson Suhas Awchat.

“Restaurants opened across India on June 8, but not in Maharashtra, where we pay among the highest statutory fees and levies in advance, which kept increasing even during lockdown,” Awchat said. The HRAWI launched a campaign a#KhadyagruhaWachva (#SaveRestaurants) last week.

Remote holiday resorts had their own problems, said Pankaj Barve, owner of a 10-cottage Vulcan Wildlife Resort in the heart of the Pench Tiger Reserve of MP. “Besides taking care of staff during the lockdown, we have to ensure their well being till October, when the tiger sanctuary will reopen for tourists,” Barve told IANS.

“Until the vaccine comes, the situation will remain uncertain. It will be difficult for most operators to adhere to the stringent conditions demanded by the government, but we are ready to start,” said Payyade Hotels Director P.V. Shetty, a former Joint Secretary of the Mumbai Cricket Association.

With barely 20-25 per cent availability, there was shortage of skilled staff for restaurants, and at one-third guests/patrons norms, it could be difficult even to recover operating costs, he said.

Sudhakar Shetty, a restaurateur with a chain of restaurants, like Hotel Riviera and Hotel Surbhi in Thane and Mumbai, said those operating from leased premises would be the worst-hit.

“They will first have to pay the accumulated rents of the past four months, and it may take at least another four months to stabilise business. They may not find it feasible to continue operating,” Shetty said.

The industry leaders apprehend that even after reopening with limits, there are big questions: “Where are the guests or patrons who are still scared, and our workers have left and will take long to return comfortably”.

Besides, there has been no decision on the demand for moratorium and other relaxations sought by the industry. Union Tourism Minister Prahlad Singh Patel has not “met the industry even once” and there’s no clarity on the government’s plans for the hospitality sector, which will make its survival “difficult and unviable”.

Kohli said over 22 million Indians travelled abroad each year, which had stopped due to the long lockdown. But if Indian states relaxed their respective rules, at least half of them could be attracted to the domestic sector, instead of visiting neighbouring countries, like Sri Lanka, Nepal, Thailand, the UAE, he said.

Business

Toyota launches lifestyle utility vehicle Hilux

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Automaker Toyota Kirloskar Motor (TKM) on Thursday , launched “Hilux” lifestyle utility vehicle.

According to the company, the Ex-showroom prices of the new vehicle will be announced in March 2022 before the start of the deliveries in April 2022.

“Today, as India continues to make larger economic strides, many customers are seeking a sophisticated lifestyle vehicle that delivers exceptional on and off-road prowess and fulfil their daily urban mobility needs be it work or pleasure,” said Masakazu Yoshimura, Managing Director, TKM.

As per the company, the Hilux is loaded with features like a heavy-duty turbo engine and diamond-like carbon coating on the piston rings for maximised frictional efficiency.

“The result is a whopping 500Nm of Torque which is by far the best in the segment,” the company said.

“The Variable Flow Control’ to the power steering has boosted drivability making the steering lighter at low speed in city traffic condition and heavier at higher speeds cruising on a highway.”

Besides, the Hilux comes with an unmatched water wading capacity of 700mm.

It features the same platform (body-on frame chassis construction) that underpins the Innova Crysta and Fortuner.

Globally, the Hilux sales has surpassed 20 million units.

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India’s FY23 GDP to witness ‘meaningful’ growth; to rise by 7.6%: Ind-Ra

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GDP

 India’s FY23 GDP is expected to grow 7.6 per cent year-on-year basis, said India Ratings and Research (Ind-Ra).

As per the ratings agency, after a gap of two years, the Indian economy will show a “meaningful expansion”, as the real GDP in FY23 will be 9.1 per cent higher than the FY20 (pre-Covid) GDP level.

“However, the size of the Indian economy in FY23 will be 10.2 per cent lower than the FY23 GDP trend value,” the agency said.

“A continued weakness in private consumption and investment demand is estimated to contribute 43.4 per cent and 21.0 per cent, respectively, to this shortfall.”

However, it pointed out that if the impact of Omicron on 4QFY22 growth turns out to be greater than the estimate then there could be some upside to the FY23 growth originating from the base effect.

“Nonetheless, there are risks to the ongoing recovery.”

Notably, the agency cited that National Statistical Organisation’s (NSO) advanced estimate (AE) of FY22 showed that private final consumption expenditure (PFCE), grew by only 6.9 per cent YoY in FY22, despite a low base and sales data of many consumer durables showing robust growth.

“This indicates that the consumption demand is still weak and not broad based. In fact, the slowdown in PFCE had begun even before the Covid-19 pandemic had hit the Indian economy.”

“Robust PFCE growth is a must for a sustained growth recovery.”

Besides, it said that wage growth both in the rural and urban areas is facing significant headwinds and has been declining since mid-2020.

“More importantly, real (inflation-adjusted) wages are indicating an erosion of household’s purchasing power. Another factor that has impaired the consumption demand lately is an abrupt rise in the health expenditure of households.”

“These trends may be cyclical in nature, but the picture even at the structural level is not healthy for households.”

Consequently, household savings have declined and their leverage has gone up significantly since FY12, the agency said.

In addition, it estimated that investments, as measured by gross fixed capital formation (GFCF), to grow 8.7 per cent YoY in FY23.

“However, private investments have been down and out over the past several years and Ind-Ra believes the revival of private investment demand will be a slow and drawn-out process.”

“The two developments that can, however, hasten this process are merchandise exports which have shown a surprise turnaround in FY22 and the Production-Linked Incentive Scheme announced by the union government in April 2020.”

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Business

Higher standard deduction for salaried may be part of tinkering

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The Union Budget 2022 may include a higher standard deduction for salaried taxpayers and tax incentives related to affordable housing.

Emkay Global Financial Services said in a report that on the revenue front, gross tax/GDP ratio is expected to increase to 10.7 per cent amid healthy tax buoyancy across segments. Though we do not see any major changes in taxes, we do not rule out minor tinkering in the form of higher standard deduction for salaried taxpayers; tax incentives related to affordable housing; or marginally higher customs duties on PLI-related finished/semi-finished products. Separately, lower non-tax revenue will be led by lower RBI dividends.

The spending focus will likely be on welfare, rural, health and MSMEs. We will also watch for financial sector initiatives (resolutions, higher FPI limits to facilitate divestment in select PSBs on sale, etc.), which could improve the efficacy of the financial sector’s ability to fund the recovery better, the report said.

Amid various push and pull, FY22 GFD/GDP could just about balance at 6.8 per cent. Positive buffers such as bumper RBI surplus, robust tax collection, and higher nominal GDP could get offset by higher payouts than budgeted on food, fertiliser subsidy, health, NREGA, Air India SPV; and possible miss on ambitious divestment targets (despite possible mega LIC IPO in March 2022).

Asset-sale execution will undeniably become the key balancing aspect, especially with a healthy NMP pipeline. We pencil in a modest divestment of Rs 800 billion, and do not account for any major 5G spectrum windfall amid limited clarity on the reserve price, the report said.

The upcoming Budget faces acute policy trade-offs between nurturing a nascent growth recovery and diminishing fiscal space with challenging debt dynamics. The uneven recovery post the pandemic raises questions about the sustainability of demand, especially as the labour market is also potentially divided. For targeted policy responses, fiscal policy tends to be more effective than monetary policy. Thus, a delicate balance needs to be maintained, ensuring the fiscal impulse is maximized to boost potential growth, even as policy adherence to medium-term fiscal sustainability is signalled, the report said.

This would require the expenditure-to-GDP ratio remaining healthy, front-loaded investment-focused stimulus, especially amid its larger multiplier effect on growth and employment. This necessitates innovative reforms, better resource allocation, and possible fiscal funding by aggressive asset sales in the form of existing functional infrastructure monetisation, disinvestments, and strategic sales, among others.

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