Travel gets a boost as Budget 2025 focuses on tourist destinations and air connectivity

Improved air connectivity has been a key driver for the tourism sector and these announcements will continue to be extremely supportive.

The travel and tourism sector has been hogging the limelight for all the right reasons as the upturn in the sector has extended well beyond the revenge travel post-Covid.  Travel has now become an integral part of household expenditure.

The Budget 2025 has interesting proposals for travel and tourism.

First, the tax rationalisation proposals of Finance Minister Nirmala Sitharaman is clearly directed at giving more money to the middle class as the tax-free income level rises from Rs 7 lakh to Rs 12 lakh annually. For an individual with Rs 12 lakh income, there is now a savings of Rs 80,000 per annum by way of lower taxes. Discretionary consumption like tourism will naturally be a key beneficiary.

In addition, the government has highlighted that top 50 tourist destination sites in the country will be developed in partnership with the states.

A big fillip to air travel in India was ushered in with UDAN that paved the way for air connectivity with smaller towns and had enabled 1.5 crore middle-class people to undertake air travel. The scheme has connected 88 airports and operationalised 619 routes.

Inspired by that success, the government now proposes to launch a modified UDAN scheme to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years.  The scheme will also support helipads and smaller airports in hilly, aspirational, and North-East region districts.

Improved air connectivity has been a key driver for the tourism sector and these announcements will continue to be extremely supportive.

The key beneficiaries are airlines like Indigo, mid-market hotel players like Lemon Tree, Royal Orchid as well as Online Travel Agents like Ixigo (La Travenues Technology) and not to forget luggage manufacturers like Safari and VIP.

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