September , 2019
Tourism can be India’s next big GDP earner
15:44 pm

Tushar K. Mahanti

After the success of its tourism’s promotional slogan ‘Atithi Devo Bhava’, the Indian tourism ministry has come out with another catchphrase 'your search ends here'.

One hopes the new slogan helps in attracting more foreign tourists to India for experiencing nature’s beauty and cultural diversity. The country needs a vibrant tourism sector now more than ever. The economy is decelerating, private consumption is slowing down as is service sector growth. Higher growth in tourism and hospitality sector that accounts for nearly a tenth of India’s GDP and more than 8% of total employment can appreciably help the economy’s turnaround bid.

In its annual analysis quantifying the global economic and employment impact of travel and tourism in 185 countries, the World Travel & Tourism Council’s (WTTC) research reveals that the sector has outpaced the global economic growth for the eighth consecutive year in 2018 and grew at 3.9% during the year – higher than the global GDP growth of 3.2%. It contributed $8.8 trillion to the global economy and accounted for 319 million jobs, equivalent to one in every ten jobs. The scale of growth and importance of the sector is also evident from the fact that one in five of all new jobs created in the world over the last five years were in travel and tourism.

A large number of people are traveling across the world – be it for work needs or pleasure or for enjoying the beauty of old architectural splendours – and the number is increasing steadily with international arrivals growing from 25 million in the 1950s to 1.4 billion in 2018 and to an estimated 2.2 billion by 2029. The industry is proving resilient to both geopolitical uncertainty and economic volatility.

India jumps six places in tourism competitiveness index

India is in the midst of a growing tourism economy with its vast expanse of natural beauty, numerous historical monuments and age-old religious destinations. The recent government initiatives and steady promotional activities abroad have seen a sharp rise in India’s tourism competitiveness globally.  It has jumped six places to reach the 34th rank in 2019 in global travel and tourism competitiveness list prepared by World Economic Forum (WEF).

“India showed the greatest percentage improvement to its overall Travel & Tourism Competitiveness Index (TTCI) score, which has helped it become the only lower-middle income country in the top 35,” the report said and lauded India’s natural and cultural assets and price competitiveness.

In the previous ranking in 2017, India had jumped 12 places to reach the 40th position. International openness through strong policies including implementing visa on arrival and e-visas and improvements in the country’s ground transport infrastructure and strong price competitiveness have benefited the travel and tourism sector in the country, the report said.

Tourism has become a priority area in India for its ability to make a difference to the lives of people by driving growth, creating jobs and nurturing infrastructural development. India offers a diverse portfolio of niche tourism products such as cruises, adventure, medical, wellness, sports, eco-tourism, spiritual and religious tourism. India has been recognised as a destination for spiritual tourism for domestic and international tourists. The country has everything – from over 7,000 km of coastline, rain forests, deserts and snow-capped mountains to temples, mosques, wildlife, tribal habitation and a multicultural population. India’s multi-dimensional culture and natural beauties seem to have been attracting foreign tourists in growing numbers.

India continues to enrich its cultural resources, protecting more cultural sites and intangible expressions through UNESCO World Heritage lists and via a greater digital presence, WEF has remarked.

Foreign tourist arrivals and forex earnings rise

Backed by aggressive campaign abroad and policy changes to facilitate easier entry, the number of foreign tourist arrivals in the country has increased steadily over the years. The number has increased from 2.65 million in 2000 to 10.04 million in 2017. In 2017, foreign tourist arrivals in India increased by 9.7% over the previous year. The international tourist arrivals have increased 14% in 2017 over the previous year.

The rise in foreign tourist arrivals has simultaneously increased India’s foreign exchange earnings. According to estimates of the tourism ministry, the foreign exchange earnings have increased by about 6% in 2018 from $ 27.3 billion in 2017 to $ 27.3 billion.

The importance of the sector in earning foreign exchange will be vivid if we look into the growth trend for a longer period. In ten years between 2008 and 2018, forex earnings from travel and tourism have increased about two and a half times from $11.8 billion to $ 28.9 billion.

Back home, domestic tourist visits to the states/UTs grew to 1.65 billion in 2017 with the top 10 states/UTs contributing more than four-fifths, 83% precisely, of the total number of domestic tourists. In last ten years, between 2007 and 2017, domestic tourist visits have gone up three and a half times from 526 million to 1.65 billion.

Tourism turns big contributor to GDP and job growth

The increase in both foreign tourist arrivals and domestic tourist visits had significant impact on employment generation. The industry provides employment to skilled, semi-skilled and unskilled labour directly and indirectly. Providing the industry with skilled manpower is imperative for India’s growth.

According to World Travel and Tourism Council’s (WTTC) report ‘Travel & Tourism: Economic Impact 2018 India’ travel and tourism sector generated 26.15 million jobs directly in 2017 (5.1% of total employment). This includes employment by hotels, travel agents, airlines and other passenger transportation services.

The total contribution of travel and tourism to employment (including wider effects from investment, the supply chain and induced income impacts) was 42.7 million jobs in 2018 (8.1% of total employment). By 2029, travel and tourism sector is forecast to support 53 million jobs (8.4% of total employment), an increase of 2.0% annually over the period.

The rise in earnings and employment of the sector has resulted in significant contribution by the sector to country’s GDP. The total contribution of this sector was Rs. 16.91 trillion or about 9.2% of GDP in 2018. The sector’s contribution to GDP rose steadily over the years and in five years, between 2014 and 2018, earnings from this sector grew over 33%, raising its share in GDP from 6.7% to 9.2% during the period. The contribution of the sector is forecast to rise to 35 billion rupees by 2029, accounting for about a tenth of India’s GDP.

The steady rise in tourist movements has led to an increase in the investment in the sector. According to a recent Yes Bank - FICCI report titled ‘India Inbound Tourism – Unlocking the Opportunity; April 2019’, India is the third largest country globally in terms of investment in travel and tourism. The investment in the sector was estimated at a huge $ 45.7 billion (Rs. 3.12 trillion) in 2018, accounting for 5.9% of national investment. This is expected to increase by 9.4% in 2019 to reach Rs. 3.42 trillion, and is projected to rise by 7.4% annually till 2029, taking the share in national investment to 6.1%

Policy measures for future growth

And if much of this growth in the tourism sector was contributed by India’s inherent advantages of natural beauty, plethora of historical monuments and numerous religious places, several policy initiatives by the government have helped it to actually happen.

The ministry of tourism through its 8 offices overseas endeavours to position India in the tourism generating markets as a preferred tourism destination, to promote various Indian tourism products vis-à-vis competition faced from various destinations and to increase India’s share of the global tourism market.

The launch of several branding and marketing initiatives by the government such as ‘Incredible India!’ and ‘Athiti Devo Bhava’ has provided a focused impetus to tourism growth. The Indian government has also released a fresh category of visa - the medical visa - to encourage medical tourism in the country. Incredible India 2.0 campaign was launched in September 2017. The Government of India is working to achieve 2% share in world's international tourist arrivals by 2025.

The government has also been making serious efforts to boost investments in tourism sector. In the hotel and tourism sector, 100% FDI is allowed through the automatic route. A five-year tax holiday has been offered for 2, 3 and 4 star category hotels located around UNESCO World Heritage sites (except Delhi and Mumbai). Total FDI received by Indian hotel & tourism sector was $ 12.35 billion between April 2000 and March 2019.

Right now, travel and tourism industry supports about one in every ten jobs in the country and is proving a dynamic engine of employment growth. Inclusive growth and ensuring a future with quality jobs being stated objectives of the government the tourism sector needs a special importance in policy making.

To promote domestic travel, Prime Minister Narendra Modi has given a simple and yet effective suggestion. He has urged the 20-million-odd Indian tourists who are travelling abroad on vacation every year, to visit 15 tourist destinations within the country by 2022 to give a fillip to the domestic tourism sector. If even half of these travellers listen to Modi’s suggestion, India’s tourism sector will break free from its single-digit growth parameter.


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