Centre's push for homestays via Mudra loans can boost local economies, say stakeholders

New Delhi: The Centre's move to promote homestays as part of its broader push for tourism development has been welcomed by stakeholders, with many saying it could help boost local economies and create employment opportunities.

Union Finance Minister Nirmala Sitharaman, in her Budget speech on Saturday, announced that homestays would be eligible for Mudra loans, a move aimed at supporting small-scale hospitality businesses in rural and semi-urban areas.

The initiative is expected to provide financial assistance to individuals looking to establish or expand homestays, particularly in popular and emerging tourist destinations.

K Syama Raju, president of the Federation of Hotel and Restaurant Associations of India (FHRAI), said the introduction of Mudra loans for homestay businesses is another positive step which will give local entrepreneurs the chance to start and grow small tourism businesses and help create more jobs and encourage tourism in these regions.

The decision comes as the tourism sector witnesses a steady revival post-pandemic, with demand for new accommodation options rising.

Industry reports suggest that the homestay segment has grown significantly in recent years, driven by domestic travel and interest in experiential tourism.

However, industry experts stress the need for streamlined implementation to ensure the benefits reach those who need them the most.

"Financing has always been a challenge for small hospitality ventures. If these loans come with minimal paperwork and low interest rates, they can encourage more entrepreneurs to enter the sector," Sandeep Kulkarni, who runs a homestay in Kasar Devi in Uttarakhand.

"But the government must also ensure proper marketing and infrastructure support to sustain this growth," he said.

According to a recent government report on the tourism sector, the homestay industry has the potential to create significant employment opportunities, particularly in rural areas.

The report highlighted the need for financial incentives, capacity building, and digital marketing support to help homestay owners thrive.

It also emphasised the importance of developing tourism clusters in rural areas to ensure a steady flow of visitors.

Under the Mudra loan scheme, micro and small businesses can avail funding of up to Rs 10 lakh. The tourism ministry is expected to work closely with banks to facilitate easier access to these loans for homestay operators.

While welcoming the initiative, some industry players pointed out challenges in securing financial assistance.

"Homestay owners in remote areas often struggle with documentation and loan approvals," Anita Dey, a homestay operator in Manali, said.

"If the process is simplified and banks are made more aware of this initiative, it will truly help grassroots entrepreneurs," she said.

The Budget also earmarks funds for improving connectivity to tourist hotspots, a move seen as critical for the success of the homestay initiative.

The homestay push aligns with the government's broader focus on tourism as a driver of employment-led growth.

Apart from financial support, the Centre has also promised intensive skill development programmes to train individuals in hospitality management.

As the sector gears up for this boost, stakeholders remain optimistic but emphasise the need for smooth execution.

"If implemented well, this initiative can position India as a top destination for immersive tourism while empowering local communities," Kulkarni said.

Track Budget reactions LIVE

Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.