Hotels and restaurants tell FinMin banks not to cooperate with loan restructuring; may “succumb” by the end of the year
Ease of doing business for MSMEs: Indian hotels and restaurants are likely to ‘succumb’ by year-end due to impact of lockdown if immediate action is not taken by government, Federation of Hotel and Restaurant Associations of India (FHRAI), which represents 5 lakh restaurants and 55,000 hotels, said the chief economic adviser of the finance ministry, Sanjeev Sanyal. The association informed Sanyal, during a recent webinar hosted by the premiere, of the “reservations and non-cooperation of banks in the extension of the one-off loan restructuring announced by the government,” according to the FHRAI. Since the lockdown was imposed by the government in March, the hospitality industry has sought the necessary support from the government to help overcome the burden of Covid. The sector, which is largely small and medium-sized enterprises, accounts for 12.75 percent of employment in India, of which 5.56 percent is direct employment and 7.19 percent indirect employment.
“We presented him with the income projections which indicate a loss of Rs 1.6 lakh crore and job losses amounting to 5.5 crore if the sector is not revived. Without income, but with rents, salaries, statutory bills still to be paid, the industry could succumb by the end of the year. India’s hotel and catering (hospitality) industry contributes around 10 percent of GDP to the country’s economy and requires urgent attention from the government, ”said Gurbaxish Singh Kohli, Vice President of the FHRAI.
Importantly, the weekend lockdown or partial lockdown, which was imposed in 15 states and EU territories, has affected the entire retail industry. Uttar Pradesh, Tamil Nadu, Punjab, Nagaland, Madhya Pradesh, Thiruvananthapuram in Kerala, Jharkhand, Jammu and Kashmir, Haryana, Chandigarh, Assam, Andaman and Nicobar had imposed the weekend lockdown in Unlock 3.0 while Uttarakhand and West Bengal were partially locked down and Maharashtra Thane district had closed shopping malls. Under Unlock 4.0, several states such as UP, Punjab, etc. continued the weekend lockdown. “Almost 95% of the retail business are MSMEs and they are struggling. All kinds of retailers see about 45 percent of their business on weekends. Demand itself is inelastic. Despite the security standards, customers are unwilling to come to the store, ”Kumar Rajagopalan, CEO of the Retailers Association of India (RAI), told Financial Express Online.
Also read: Atmanirbhar Bharat: government extends program to agarbatti units; will now benefit around 6,500 artisans
Sanyal, however, has informed hoteliers and restaurateurs that “appropriate action” will be taken against banks that do not follow the RBI or the government directive. “If something doesn’t work, the government will step in and identify the reasons why it doesn’t work. I would ask the industry to point out specific cases and details of banks so that we can take action to address and resolve the issues, ”Sanyal said, adding that the 100% guarantee given to MSMEs also applies to the hospitality sector.
The association also informed Sanyal of the interaction with the Ministry of Commerce to “streamline and reduce the number of licenses under the ease of doing business policy. We also informed him of unscrupulous licensing laws, including copyright issues, ”said Pradeep Shetty, Co-Secretary, FHRAI. As Sanyal urged the association to reconnect on the issue of streamlining licensing, he urged members to “focus on the things available and try to resolve the issues in the existing choices that are not working.” . world where systems operate successfully. So instead of looking to perfect things, we should aim for minimum movement for maximum result, Sanyal added.