LTC voucher: FM's imprudence, China's gain

The government, as part of five stages of unlock, has permitted hotels, restaurants, bars etc to open. Then why not allow the employees to travel rather than entice them to spend on some other goods or gadgets. If one can go to see movie following SOPs, why not travel to some best destinations? SOPs are being strictly followed by airlines, railways and hotel industries. Now that it is almost ten months since the people have been living with corona, they have fully understood the importance of the health protocols they have to follow. Moreover, when all other sectors are being thrown open, the big question is why not tourism sector. People are tired of spending ten months working from home and are looking for a break. Is it not the time for the Union government to see that some relaxations are given to this industry as well and put it back on track? 

With Navratri festivities have kick started from today, the e-commerce platforms have come forward with all kinds of mega sales with different nomenclature. This apparently will boost the sales of various electronic gadgets, apparels, home appliances etc. It appears that for the first time the Union government too has decided to help give a boost to e-commerce in the wake of Covid-19 pandemic.

Union Finance Minister Nirmala Sitharaman appeared to be overwhelmed in making the announcement that the Centre will launch an LTC cash voucher scheme and special festival advance scheme. She said this would fill the gap in supply-side push which had arisen due to lack of demand measures after the Centre had announced "Atma Nirbhar Bharat" package in May. She said the LTC cash voucher scheme and special festival advance scheme will make government employees spend more in the upcoming festive season. As per the government, the scheme will generate additional consumer demand of around Rs 28,000 crore.

Like any other e-commerce deal, this also comes with conditions apply. An employee opting for this scheme, would be required to buy goods or services worth 3X the fare and one time the leave encashment before March 31, 2021. The money must be spent on goods attracting GST on 12 per cent or more from a GST registered vendor through digital mode and GST invoice will be required to be produced.

Well, a careful examination of this scheme makes one thing clear. The government, while encouraging e-commerce, is in fact killing another major revenue earning sector and that is tourism sector.

Central government employees get LTC in a block of four years — one travel to anywhere in India and one hometown or two for hometown visits. Air or rail fare, as per pay scale or entitlement, is reimbursed, and in addition, leave encashment of 10 days (pay and dearness allowance) is paid. It helps the employees to chill out with families and explore new destinations. This helps the railways, the airlines, the hotel industry and tour and travel operators. It also provides large scale indirect employment to cabs and other transport industry including private buses.

The government, as part of five stages of unlock, has permitted hotels, restaurants, bars etc to open. Then why not allow the employees to travel rather than entice them to spend on some other goods or gadgets. If one can go to see movie following SOPs, why not travel to some best destinations? SOPs are being strictly followed by airlines, railways and hotel industries.

Now that it is almost ten months since the people have been living with corona, they have fully understood the importance of the health protocols they have to follow. Moreover, when all other sectors are being thrown open, the big question is why not tourism sector. People are tired of spending ten months working from home and are looking for a break. Is it not the time for the Union government to see that some relaxations are given to this industry as well and put it back on track? Many tour operators have gone out of work. Frustration is mounting. The announcement of the Union Finance Minister on LTC came as rubbing tons of mirchi on their wounds.

The Federation of Associations in Indian Tourism & Hospitality (FAITH), a body representing tourism and hospitality sectors which have been the worst hit by the pandemic, feels that the Finance Minister had redirected the funds of LTC towards e-commerce. They say that they had been constantly meeting the Finance Minister and Union Minister for Tourism Prahalad Singh Patel but there has been no response from them. The States are ready to offer safe tourism, but the Centre seems to have shut its eyes, the industry feels. Kutch in Gujarat, Prime Minister Narendra Modi's home State is ready for Rann of Kutch festival under strict SOPs but lo and behold, the government does not appear to be thinking on those lines. Instead, it has drawn plans to dry up the tourism travel and hospitality industry.

As the NDA-II government led by Narendra Modi has set an ambitious goal of $5 trillion economy by 2024, the travel & tourism sector is identified as an important area where the capacity can be largely added to boost revenue and foreign exchanges. Last year, the foreign exchange earnings from tourism increased 4.70 per cent on-year to USD 28.59 billion, taking cues from government initiatives like e-visa that have helped in attracting various international tourists.

Tourism in India is important for the country's economy and is growing rapidly. The World Travel and Tourism Council calculated that tourism generated Rs 16.91 lakh crore (US$ 240 billion) or 9.2% of India's GDP in 2018 and supported 42.673 million jobs, 8.1% of its total employment.

The travel and tourism sector has a huge role to play in the $5 trillion economy dream as it is one of the sectors that is on the rise, despite the economic slowdown. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains, and places of natural beauty spread across the country. Tourism is also a potentially large employment generator besides being a significant source of foreign exchange for the country.

This being the situation, it is surprising that the Finance Minister came up with the LTC coupon scheme saying that given the current pandemic, employees may refrain from travelling and thus lose the benefit of LTC that they would have enjoyed during a normal period.

The government needs to ponder over the scheme once again and see how can buying electronic gadgets help the local industries generate additional consumer demand of around Rs 28,000 crore? Certainly not. On the other hand, it will helping China with whom we have been engaged in a bitter standoff since 20 Indian soldiers died in clashes with People's Liberation Army at Galwan valley. Introducing the LTC coupon scheme at such a time would certainly help Chinese economy more than Indian economy.

It is a known fact that most of the electronic gadgets are either Korean or Chinese make. Even if they are Korean make, they have many Chinese components. The market is flooded with mobile phones from companies like Xiomi, Redmi etc which are Chinese companies. So, whom are we helping? Will it not adversely hit our slogan of Atma Nirbhar?

Instead, if it had opened the travel, tourism and hospitality sector, it certainly would have brought life back to thousands of people who are dependent on this industry and would have helped the government to mop up good revenues. Rs 28,000 crore of LTC money. This would have had multiplier effect on trade, industry and economy.