Tourism Ministry Offers Finance Scheme For Budget Hotels

Anindita Chattopadhyay - New Delhi

The Ministry of Tourism (MoT) has come up with a financial assistance scheme for hoteliers in the budget segment, apart from writing letters to the urban development ministry and railways ministry to make lands available on long lease and at subsidised rates to interested investors in this segment.

G Shankar Dhar, joint director general, MoT said, "The minister has realised that owing to high cost of land building a budget hotel becomes an expensive proposition and the return on investment is quite low. Hence, we decided to come up with schemes to make their projects viable and give a fillip to tourism."

The initiative comes in the backdrop of the shortage of hotels in the budget category. According to Dhar, the ministry will now provide a capital subsidy to investors not exceeding 10 per cent of the loan amount. The one- and two-star hotels will get Rs 25 lakh and Rs 50 lakh as subsidy, while for three-star and heritage hotels it is Rs 75 lakh.

The second scheme, a viability gap funding proposal, is in the process of finalisation. Budget hotel projects under public-private joint venture can get funding not exceeding 20 per cent of the total project cost to help them in plugging in the viability gap.

Tourism minister Renuka Chowdhury has asked the Finance Minister to give Tourism Finance Corporation of India to the tourism ministry. "I have requested the FM to bring TFCI under the MoT so that we can use the financial institution for viability gap funding. Tourism is a sector that is on the rise and can plough back money and uplift the condition of the poor. I have told the FM to support me in this budget. I will give him back money in the next budget," said the minister.