Offering a big bonanza to the hotel industry, the government has decided to provide grants up to Rs 1 crore for selected properties as it desperately tries to create a decent hotel infrastructure in the country.

The grant will be available for construction of new rooms in one, two and threestar category hotels and for refurbishment of old ones in heritage hotels, a Tourism Ministry source told this website's newspaper ..

Heritage properties will get Rs 3 lakh for upgradation or renovation. This will be subject to a maximum of Rs 1 crore for a single heritage property. Two and threestar category hotels will get Rs 3 lakh for each room they construct. While a threestar hotel can get a maximum of Rs 1 crore, the upper limit in case of twostar hotel is Rs 75 lakh. For a one-star hotel, the figure is Rs 2 lakh per room constructed, subject to a maximum of Rs 30 lakh.

The Ministry has earmarked Rs 20 crore for this proposal this year. The source said in case more money was required, the Ministry could ask for a supplementary grant. The money will be disbursed after the construction or the renovation is complete, following an assessment made by an inspection committee.

The offer for grants is yet another attempt by the Tourism Ministry to reduce the acute shortage of hotel rooms in the country, particularly in view of the Commonwealth Games in 2010.

In this years budget, Finance Minister P. Chidambaram announced five-year tax-breaks for new star-category hotels and convention halls coming up in the National Capital Territory region in the next three years.

After much prodding from the Tourism Ministry, which wanted this provision to be extended to hotels all over the country, the Finance Ministry agreed to provide similar tax-breaks for hotels coming up in the 19 districts that have places of Buddhist importance.

The Tourism Ministry has long been arguing that the shortage of hotel rooms is the biggest hurdle to the growth of tourism and hopes that this latest step will help to bridge the gap. These grants are actually an interim arrangement and will be available for a period of one year pending the finalisation of the Eleventh Five-Year plan.

Once the Plan is finalised, this provision will be extended to the full five-year period. The Planning Commission is expected to give its okay for this interim arrangement soon, sources said.

Source:  NewIndPress.com