Indian Economy and Policy

Report
On
Tourism in India.

Under the able guidance of-

Prof. Bhagyashri Dabke

Presented by-
(MMS - 010006) Rutuja Dagade
(MMS - 01009) Renuka Gavade
(MMS - 010027) Mrunal Ruke

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 INDEX
Sr.No.
Topics Page No.
1 Introduction 3

2 Opportunities in Tourism 3

3 Prospects in Tourism 3

4 Indian Tourism and Hospitality Industry Analysis 4

5 Challenges in Tourism 5
6 Different forms of Tourism 7
7 Positive impacts of Tourism in India 9
8 The economic impact of tourism 10
9 Importance of tourism industry 11
10 The distinct location of tourism in poverty alleviation 11
Conclusion

Tourism in India

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 Introduction:
India is a great country with a haven of tourism delights like wealth of sights, cultural
exuberance, and diversity of terrain. It is no doubt a place of wonder, with creative burst of
cultures, races, and religions, over a billion people, 15 official languages, and gifted nature's
beauty. Its diversity is out of all bounds. Indians live with variety and thrive on diversity. From
mud hut to mansion, there is variety.
In every aspect, India is on massive exaggerated scale, which can be compared to the
superlative Himalayan Mountains. It is set apart from the rest of Asia by the supreme continental
wall of the Himalayas. It touches the three large water bodies. This triangular peninsula defined
by the Bay of Bengal to the east, the Arabian sea to the west, and the India Ocean to the south has
in its store the wealth of natural resources. The abundance of vast mountain ranges, exciting
national parks, enchanting rivers, roaring seas, silent valleys, thrilling waterfalls, historical
monuments, holy temples, and diverse tribal culture added with the hospitality of its people, India
offers innumerable opportunities for tourism.
Opportunities in Tourism
Industry India’s size and massive natural, geographic, cultural and artistic diversity
offers enormous opportunities for the travel and tourism industry. The promotion and aggressive
marketing measures undertaken by the government is expected to aid influx of tourists. The
industry would also benefit from introduction of new forms of tourism and development. Medical
tourism in India has gained considerable popularity in recent years. India has a major cost
advantage in this field compared with other countries. In addition to cost advantages, Indian
healthcare industry offers state-of-the art equipment, technological advancement, qualified and
experienced medical personnel and a blend of modern and traditional medicines. Thus, medical
tourism has immense potential in India.
Opportunities also exist in ecotourism, adventure tourism, and cruise tourism. Eco-
tourism is increasing in popularity, evident in the development of eco-friendly hotels and tour
packages. With increasing environment awareness and consciousness among tourists and given
efforts undertaken by the government and private players, the ecotourism segment is expected to
record handsome growth in the coming years. India holds immense potential in adventure and
cruise tourism. India’s greatest adventure tourism assets are Himalayas and its mighty rivers. The
peak period for adventure tourism is the “lean period” of cultural tourism. Development of
adventure tourism can make India a round-the-year tourist destination. The cruise industry is one
of the most promising industries in India. However, strong efforts need to be made to develop this
industry. Other forms of tourism such as agri tourism, pilgrimage tourism, heritage tourism, and
MICE tourism also hold enormous potential.
1. Prospects in Tourism

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 Industry Healthy economic growth recorded in past few years, especially in the services
industry, has led to increase in business travel. Higher disposable income and affordability have
increased domestic leisure travel in India. Foreign tourist arrivals in India have also grown.
However, the industry has shown signs of recovery in the first half of 2010. This is a clear
indicator that the long-term prospects for the Indian travel and tourism industry are bright. India
is expected to witness increased tourist activity both in the business and leisure segments in the
coming years. India has been identified as one of the fastest-growing countries in terms of
tourism demand. The tourism and hospitality industry is one of the largest segments under the
services sector of the Indian economy. Tourism in India is a key growth driver and a significant
source of foreign exchange earnings. In India, the sector's direct contribution to gross domestic
product (GDP) is expected to grow at 7.8 per cent per annum during the period 2013-2023. The
tourism sector in India is flourishing due to an increase in foreign tourist arrivals (FTA) and a
larger number of Indians travelling to domestic destinations.
The role of the Indian government, which has provided policy and infrastructural support, has
been instrumental in the growth and development of the industry. The tourism policy of the
government aims at speedy implementation of tourism projects, development of integrated
tourism circuits, special capacity building in the hospitality sector and new marketing strategies.
India’s tourism industry is experiencing a strong period of growth, driven by the burgeoning
Indian middle class, growth in high spending foreign tourists, and coordinated government
campaigns to promote ‘Incredible India’. In fact India has a rich source in tourism sector to
influence GDP, employment, image, foreign investments, new projects and the like to make our
position comfortable in globally.

2. Indian Tourism and Hospitality Industry Analysis

India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism
products - cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and
religious tourism. India has been recognized as a destination for spiritual tourism for domestic
and international tourists.
Total contribution by travel and tourism sector to India’s GDP is expected to increase from Rs.
15.24 trillion (US$ 234.03 billion) in 2017 to Rs.32.05 trillion (US$ 492.21 billion) in 2028. India
was ranked 7th among 184 countries in terms of travel & tourism’s total contribution to GDP in
2017. Travel and tourism is the third largest foreign exchange earner for India. During 2018,
FEEs from tourism increased 4.70 per cent year-on-year to US$ 28.59 billion. Foreign Tourist
Arrivals (FTAs) increased 5.20 per cent year-on-year to 10.56 million in the same period. Foreign
tourist arrivals for medical purpose increased from 427,014 in 2016 to 495,056 in 2017(P).
During 2018, arrivals through e-tourist visa increased 39.60 per cent year-on-year to 2.37 million.

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 As of 2017-18, 81.1 million people are employed in the tourism sector in India which was 12.38
per cent of total employment in the country. The Government of India has set a target of 20
million foreign tourist arrivals (FTAs) by 2020 and double the foreign exchange earnings as well.
The launch of several branding and marketing initiatives by the Government of India such as
‘Incredible India!’ and ‘Athiti Devo Bhava’ has provided a focused impetus to growth. The
Indian government has also released a fresh category of visa - the medical visa or M visa, to
encourage medical tourism in the country. Incredible India 2.0 campaign was launched in
September 2017. In September 2018, the Indian government launched the ‘Incredible India
Mobile App’ to assist the traveller to India and showcase major experiences for travelling. The
Government of India is working to achieve one per cent share in world's international tourist
arrivals by 2020 and two per cent share by 2025.
In October 2018, Statue of Sardar Vallabhbhai Patel, also known as ‘Statue of Unity’, was
inaugurated as a tourist attraction. It is the tallest statue in the World standing at a height of 182
metre. It is expected to boost the tourism sector in the country and put India on the world tourism
map.
The Government has also been making serious efforts to boost investments in tourism sector. In
the hotel and tourism sector, 100 per cent 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 US$ 11.39 billion between April 2000 and June 2018. India is a large market for travel and
tourism. It offers a diverse portfolio of niche tourism products - cruises, adventure, medical,
wellness, sports, MICE, eco-tourism, film, rural and religious tourism. India has been recognized
as a destination for spiritual tourism for domestic and international tourists.

3. Challenges in Tourism
Industry Tourism industry in India is growing and it has vast potential for generating employment
and earning large amount of foreign exchange besides giving a fillip to the country’s overall
economic and social development. However, much more remains to be done. There are
challenges involved in tourism industry.
a) Lack of Proper Infrastructure
Infrastructure needs for the travel and tourism industry range from physical infrastructure such as
ports of entry to modes of transport to urban infrastructure such as access roads, electricity, water
supply, sewerage and telecommunication. The sectors related to the travel and tourism industry
include airlines, surface transport, accommodation (hotels), and infrastructure and facilitation
systems, among others.
b) Access and Connectivity

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 The infrastructure facilities like air, rail, road connectivity, and hospitality services are still needs
to be improved to connect various cities across the country. This remains a major issue for the
development of tourism. Tourists largely depends on road network rather other mode. Despite
numerous efforts will be taken to modernize the road facilities connectivity remains a major
challenge. There is a greater need to improve road and rail network to connect various locations
across different regions in the country.
c) Amenities
Amenities available at various tourist locations and en route need to be improved. These include
basic amenities such as drinking water, well-maintained and clean waiting rooms and toilets, first
aid and wayside such as lounge, cafeteria, and parking facilities, among others. India scores
poorly in terms of availability of these infrastructure facilities. Inadequate infrastructure facilities
affect inbound tourism and could lead to an increase in the outflow of domestic tourists from
India to other competitive neighboring countries.

d) Human Resource
To sustain growth in the tourism industry trained workers is required at various levels such as
managerial, supervisory, skilled or semi-skilled. At mid and senior management levels, the
industry faces talent crunch and at the front-line staff level, although human resources are
adequate, a boom in other service industries such as banking, retail, airline and BPO have resulted
in shortage of manpower at this level for the travel and tourism industry. Thus, we have a
demand-supply mismatch with respect to work force in the tourism sector in India. Attrition,
shortage of tourism training infrastructure, qualified trainers, and lack of proper strategies and
policies for human resource development affect the industry. The industry needs to address these
problems at the earliest.
e) Service level
The degree of service offered by the various stakeholders has a significant impact on determining
the tourist’s overall experience of India as a tourist destination. The government has taken
initiatives to promote responsible tourism by sensitizing key stakeholders of the tourism industry
through training and orientation. In order to have a sense of responsibility towards tourists and to
inspire confidence over foreign tourists in India as a preferred destination. As India, we need to
focus more to offer better services to make India to be the strong segment in tourism.

f) Marketing and Promotion

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 India needs to change its traditional marketing approach to a more competitive and modern
approach. There is a need to develop a unique market position and the brand positioning will be
the essence of the country’s tourism products to the potential customer. Indian tourism products
are promoted primarily by the Ministry of Tourism with the involvement of state governments
through the State Tourism Development Corporations. For any new thoughts exist in a sector it
require support to develop and flourish with the involvement of Government. India has big
opportunity in tourism to make it better position to use and consider new strategy in marketing to
close with domestic as well as global tourists.
g) Taxation
Tourism in India is a high-taxed industry, which makes India expensive as a tourist destination.
This is affecting the growth of the industry in India and India is losing out to other low- cost
destinations. Different types of taxes are levied across the entire industry right from tour
operators, transporters, airline industry to hotels and these include service tax, luxury tax, tax on
transportation, tax on aviation turbine fuel (airline industry), and various taxes on transportation.
In addition, these tax rates tend to vary across different states in the country. Obviously, this will
be one of the challenges behind of our sustainability in this sector.
h) Security
Security has been a major problem for our growth in tourism for a number of years. Terrorist
attacks or political unrest in different parts of the country have adversely affected sentiments of
foreign tourists. However, the government needs to take a proactive approach in addressing these
issues and in averting the potential impact on the industry. Cybercrime is another major challenge
in tourism industry. Use of Internet in the travel and tourism industry has increased rapidly in
recent years and has emerged as one of major segments for online spends. The industry needs to
take measures to make the process of online bookings more secure and transparent and needs to
create awareness regarding this. Because, some of the biggest frauds have been detected in this
segment and the issue of online security has assumed significantly importance.
i) Regulatory Issues
A number of countries competing with India for tourists provide visa on arrival. India should
provide visa on arrival for more countries or for certain categories of tourists for a specific
duration. A number of projects in the tourism infrastructure segment and in the hotels industry are
delayed due to non-attainment of licenses and approvals on time. The government recently
cleared the long-standing proposal for single window clearance for hotel projects to hasten the
process of infrastructure development. Implementation of this proposal would help development
of tourism and hospitality infrastructure in the country. There is a greater need for speedier
clearances and approvals for all projects related to the industry.

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4. Different forms of Tourism
Tourism industry has contributed enormously in the flourishing graph of India's economy.
Tourism industry is the backbone of any country's economic position. It raises the living
conditions of the citizens of the country. It will be helpful in raising the GDP of the country. Self-
employment gives a new boost to the country. Infrastructure development is another advantage of
tourism industry. Cultural exchange is also possible only through tourism. There are different
types of tourism. The recent trend is moving toward niche segments of tourism:
a) Medical tourism
Medical tourism also known as health tourism has emerged as one of the important segments of
the tourism industry. Travel agencies and the mass media to describe the rapidly growing practice
of travelling across international borders to for healthcare have coined the term. Travelers
typically seek services such as elective procedures as well as complex specialized surgeries such
as joint replacement (knee/hip), cardiac, dental, and cosmetic surgeries. Psychiatry, alternative
treatments, and convalescent care are also available.
b) Wellness tourism
Wellness tourism is regarded as a sub-segment of medical tourism. Here, the primary purpose is
achieving, promoting or maintaining good health and a sense of well-being. India with
widespread presence of Ayurveda, Yoga, Siddha, and Naturopathy, complemented by its spiritual
philosophy, is a well-known wellness destination. Wellness tourism includes Ayurveda therapies,
spa visits, and yoga meditation. The government is promoting this form of tourism with publicity
and promotional activities. Adventure tourism Travel for the aim of exploration or travel to
remote, exotic and possibly hostile areas is known as adventure tourism. With tourists looking for
different options, adventure tourism is recording healthy growth.
c) Adventure tourism
Adventure tourism refers to performance of acts, which require significant efforts and some
degree of risk or physical danger. The activities include mountaineering, trekking, bungee
jumping, mountain biking, river rafting, and rock climbing. India with its diverse topography and
climate offers tremendous scope for adventure tourism. The mountain regions offer lot of scope
for mountaineering, rock climbing, trekking, skiing, skating, mount biking and safaris; rushing
rivers provide opportunities for river rafting, canoeing and kayaking; and oceans provide
tremendous opportunity for diving and snorkeling.
d) Heritage tourism
Heritage tourism is defined as “travel undertaken to explore and experience places, activities, and
artifacts that authentically represent the stories and people of the past and present”. It is oriented

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 toward cultural heritage of the tourist location. It involves visiting historical or industrial sites,
religious travel or pilgrimages. India is well known for its rich heritage and ancient culture. The
country’s rich heritage is amply reflected in the various temples, majestic forts, pleasure gardens,
religious monuments, museums, art galleries and urban and rural sites, which are citadels of
civilization. All these structures form the products of heritage tourism.
e) Eco tourism
Eco tourism, also known as ecological tourism, is travel to natural areas to appreciate the cultural
and natural history of the environment, while not disturbing the integrity of the ecosystem and
creating economic opportunities that make conservation and protection of natural resources
advantageous to local people. It involves travel to destinations where flora, fauna and cultural
heritage are primary attractions. Ecotourism also minimizes wastage and the environmental
impact through sensitized tourists. It can be one of the medium to preserve local culture, flora and
fauna and other natural resources.
f) Rural tourism
Rural tourism encourages rural life, art, culture and heritage of rural locations, benefitting the
local community economically and socially as well as enabling interaction between the tourists
and locals for a more enriching tourism experience. India’s rural, geographical and cultural
diversity enables to offer a wide range of tourism products and experiences. Increasing levels of
awareness, growing interest in heritage and culture, improved accessibility to rural areas, and
environmental consciousness are playing an important role in promoting rural tourism.
g) Wildlife tourism
Wildlife tourism, one of the fastest segments of tourism, involves travel to different locations to
experience wild life in natural settings. India is endowed with various forms of flora and fauna
and it has numerous species of birds, mammals, reptiles, amphibians and plants and animals. To
tap the potential of wildlife tourism, the government has launched some wildlife packages for
travelers. Wildlife Tourism in India includes wildlife photography, bird watching, jungle safari,
elephant safari, jeep safari, jungle camping, ecotourism etc. The country offers immense
opportunities for wildlife tourism.
h) MICE tourism
MICE (Meetings, Incentives, Conferences and Exhibitions) tourism is also one of the fastest
growing in the global tourism industry. It largely caters to business travelers, mostly corporates. It
caters to various forms of business meetings, international conferences and conventions, events
and exhibitions. Hong Kong, Malaysia and Dubai are the top destinations for MICE tourism.
India is also present in this segment. This form of tourism combines annual business meetings
and conferences with pleasurable events for delegates and attendants. India can be competitive

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 with other MICE tourism destinations owing to its natural beauty, rich heritage and geographical
diversity.
5. Positive impacts of Tourism in India

a) Generating Income and Employment

Tourism in India has emerged as an instrument of income, employment generation, poverty
alleviation and sustainable human development. It contributes 6.23% to the national GDP and
8.78% of the total employment in India. Almost 20 million people are now working in the India’s
tourism industry.
b) Source of Foreign Exchange Earnings
Tourism is an important source of foreign exchange earnings in India. This has favorable impact
on the balance of payment of the country. The tourism industry in India generated about US$100
billion in 2008 and that is expected to increase to US$275.5 billion by 2018 at a 9.4% annual
growth rate.
c) Preservation of National Heritage and Environment
Tourism helps preserve several places, which are of historical importance by declaring them as
heritage sites. For instance, the Taj Mahal, the Qutab Minar, Ajanta and Ellora temples, etc.,
would have been decayed and destroyed had it not been for the efforts taken by Tourism
Department to preserve them. Likewise, tourism also helps in conserving the natural habitats of
many endangered species.
d) Developing Infrastructure
Tourism tends to encourage the development of multiple-use infrastructure that benefits the host
community, including various means of transports, health care facilities, and sports centers, in
addition to the hotels and high-end restaurants that cater to foreign visitors. The development of
infrastructure has in turn induced the development of other directly productive activities.
e) Promoting Peace and Stability
Honey and Gilpin (2009) suggests that the tourism industry can also help promote peace and
stability in developing country like India by providing jobs, generating income, diversifying the
economy, protecting the environment, and promoting cross-cultural awareness. However, key
challenges like adoption of regulatory frameworks, mechanisms to reduce crime and corruption,
etc., must be addressed if peace-enhancing benefits from this industry are to be realized.
6. The economic impact of tourism

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Tourism is travel for relaxation, for business purposes, refreshment, family and spiritual, usually
for limited period. It mainly related with travelling internationally but may also bring up
travelling within the same country or outside the state. Tourism has turn out to be a prevalent
worldwide relaxation activity. It can be local or global and worldwide tourism has both inbound
and outbound for several countries and touches the economy of the source as well as host states,
and in few cases it shows a vibrant significance.
It is basically a group of events, facilities and businesses that carry an experience of travelling
that comprise of lodging, consumptions establishment, conveyance, hospitality services, facilities
provide for entertainment and for various activities for those inhabitants or groups that are
moving away from home. The World Tourism Organization (WTO) make an assertion that
tourism is now consider as the largest industry globally with yearly income of over $3 trillion
dollars. In the United States it provides over six million careers, creating it the state’s leading
company.
The activity of tourism in various countries is reflected the most significant than creation
concerning to the financial characteristics as well as social impacts. For a growth of economy
tourism is an exceptional facilitator that’s why it is a vital part in macroeconomic level. This
business is imperative to force labour and is essential cause of government’s revenue.
The economic position of tourism fluctuates from place to place but can be comprehended to
make an important role to numerous wealth of the countries. More economically developed
countries (MECs) profits immensely from tourism in term of overall wealth produced, even when
the % of GDP that tourism creates is small. Lower developed countries (LEDCs) are inconstant in
their participation in tourism but majority perceive tourism as a particular significant way of
receiving money into their countries. Certain LEDCs are dependent on tourism and can produce
more than 50% of GDP, other than distributing primary products for example food items or
synthetic products for instance clothing. This can be challenging as terrorism, was and natural
tragedies could put individuals go for holidays which would band away a massive portion of a
state’s revenue.
Wealthy states for instance USA, France and Spain all have vast number of tourist and as a result
large aggregates of money prepared from tourism as an activity. On the other hand, the
percentage of GDP the involvement of tourism is small but not irrelevant. These nations obtain
lots of individuals as tourist since they have the setup that includes airports, hotels, and visitor’s
facilities to permit tourist to have an excessive visitor practice. They are also politically secure
places.
Subordinate countries obtain distant tourist in small amount and make less money from tourism
as an actions. Conversely, leisure industries can frequently make up a massive percentage of
nations GDP. This is due to the reason of those states that have smaller number of other

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 businesses to create money and this marks them susceptible to produce modification in their
tourism industry. This is particularly obvious in Island states where restricted land area makes the
progress of other businesses challenging.
Tourism is one of the powerful operators of employment and wealth globally. Improvement in
poverty is one of the ultimate challenges globally. In spite of tempestuous times for the world’s
recession, these simple facts are not likely to change. If we focus on wealth creating power of
tourism on individuals most in need rests an enormous task and prospects.
7. Importance of tourism industry
a. Sources of foreign exchange earnings

Industry of tourism is the key effective type of business worldwide.

b. Employment Opportunities

This industry is also one of the significant segments. It creates opportunities related to
employment. It offers services to inexperienced, prenominal and experienced manpower.
Director, labour etc. are the individual or efforts necessary in the industry of tourism.

c. Sources of public as well as private income

Industry of tourism is the main cause of earnings for public along with private sector government
sales tax, service tax and charges tax etc. which is recognized as government proceeds is the
revenue of community. Handicraft, arts etc. are the stuffs that fascinate tourist and majority of
them purchase them and the seller make some profit which is called private earnings.

d. Cultural Exchange

Business of tourism accommodates social interchange tourist bring over several ethnic
perceptions of other states wherever they visit. Native individuals can pick up their linguistic,
skill, talent, values etc. and vice versa.

e. Publicity of nation

Tourism publicizing the small states in various part of the world, those are difficult to be
positioned in the global map (The Importance of Tourism, 2015)
8. The distinct location of tourism in poverty alleviation

a. The growth and size of the sector

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 In numerous states, tourism turns as a device for improvement through the earnings of foreign
exchange and the formation of indirect and direct service. Tourism subsidizes 5% of the world’s
GDP. It report for 6% of the world’s trades in facilities being the fourth largest export region after
chemicals, automotive and fuel products. Tourism is important for 235 million employments or
one in every job globally. In 2011, global onsets raised by 4% accomplishment 982 million, up
from 939 million in 2010, in a time described by a delayed overall economic regaining, major
dogmatic variations in the  Middle East and north Africa and natural tragedies in Japan (Tourism
and Poverty Alleviation, 2010)

b. The character of tourism

There are various features of tourism as an action which mark it principally appropriate to low
revenue states and to poor societies surrounded by them. These consist of:

 Its response to specific resources: Tourism dwell pronounced importance on certain

common structures of emerging countries, for example rich cultural heritage, warm temperature,
motivating sceneries and rich biodiversity. These assets can be predominantly superficial in rural
areas, which may have a virtual improvement for tourism while being at a difficulty in most other
financial regions (Tourism and Poverty Alleviation, 2010)
 Its accessibility to the poor: Tourism is somewhat labour demanding area and is
conventionally fabricated of micro and small initiatives. Several actions in tourism are mainly
suitable to females, young individuals and unprivileged groups for example traditional minority
inhabitants. Numerous tourism businesses are possibly somewhat manageable to the poor as they
need comparatively few services and little speculation. Various might also be part time and used
to complement revenue from further actions (3)
 Its connectivity: By means of several dissimilar actions and efforts mark up the tourism
product, which has an enormous and expanded supply chain, expenditure by tourists can value a
extensive variety of regions for example cultivation, handiworks, carriage and other facilities.
Further series of outlay by those individuals whose revenue is reinforced by tourism extent the
economic value (Tourism and Poverty Alleviation, 2010)
 Its linking of consumers to producers: Tourism, remarkably, is a doings which carries
the customers to the manufacturers. The interface amid tourists and underprivileged societies can
deliver a numerous of vague and concrete assistances. These can have variety from improved
responsiveness of ecological, traditional, and financial concerns and principles together with
common welfares from enriched confined asset in organization.

On the contrary, there are also negative characteristics of tourism as a source of poverty easing,
which need certain consideration.  The chief ones comprise:

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 Volatility and instabilities in demand: Tourism is very complex to financial, socio-
political and environmental measures disturbing tourists’ eagerness to travel. The poor can be
mainly susceptible to unexpected falls in demand due to the lack of insurance cover and
communal security. Still, tourism often call leaps and bound swiftly when conditions vary.
 The demand of seasonal environment, which can be very peaked: This involves
good incorporation among leisure industry and further financial accomplishments in order to
deliver an adequate constant basis of income.
 Influence on life-supporting assets: These comprise of land, water, biodiversity and
food and energy sources. Their availability to the needy can be endangered by struggle and excess
use from tourism. Deprivation of ethnic resources and disturbance to social organizations has
equivalent pressures. Worldwide concerns of reserve lessening and environmental deprivation
may be as significant by means of local ones, together with the long lasting consequence of
tourism on environment modification and the influence of accommodation and alleviation actions
on travel configurations.
 Weak linkages to the poor: The essence of tourism asset and absence of commitment
of the poor can grounds considerable tourism costs to escape away from poor destinations. The
revenue that remnants may not end up promoting the poor, reaching as an alternative and
improved educated and affluent sections of civilization.

9. Economic Importance of Tourism

Tourism is one of the most imperative characteristic for evolving states. Domestic and
international tourism both of them must be measured to estimate the effect of tourism on the
budget.
To the mass section/area tourism offers a basis for increasing travel as an export industry, which
reflects that the level of financial activities of the region shall rise over the transaction of goods
and facilities to the travellers. Tourism is also responsible for foreign exchange devoid of
distributing whatever out of the state and it delivers more even incomes for the nation than any
other business. Tourism may also intensify earnings related to export along with the proportion of
advancement of the economy. The profits in the earnings related to foreign exchange from unseen
exports that are useful in compensating the loss if any, which the nation may have from a
detectable export.
This stability in outgoings may also be demarcated as “a declaration of revenue and spending on
worldwide financial records”.
Expenditures and revenues on universal interpretation are of three categories:

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 Observable stability of employment (involving to the import and export of products and
supplies manufactured.
 Imperceptible items (concerning to facilities for example shipping, transport, banking
and insurance)
 Transmissions of capitals

Distant from rise in profits the tourism also has influence on service generation.
Fortuny et al (2008) stated that tourism accelerates the enlargement of particular area. The sum of
visitor’s spending that rests in a region and offers a cause of revenue to inhabitants and trades is
called direct effect and this currency is paid in advance to suppliers, earnings of employees and
various objects used in generating the goods or facilities acquired by the tourists is the
subordinate effect.
Tourism and Tax earning: The government of nearly all states has continuously assigned
importance in the monetary improvements done with tourism industry. Liable upon financial
strategies and tax government originates significant profits from tourism industries and direct and
indirect dues are imposed on different practices of revenue and financial actions.
What economic impacts does tourism have?
Tourism consists of a wide range of economic effects. Tourists subsidize to trades, revenues,
employment, tax incomes and profits in a region. The maximum impacts that take place inside the
main sector of tourism are restaurants, fun fair, housing or accommodation, retail trade and
transportation. Considering the secondary impacts, tourism influence majority of the parts of the
economy. The financial control analysis of activity of tourism generally concentrates on
variations in trades, revenues and services in an area subsequent from tourism actions.
According to Hall and Lew (2009), a simple influence of tourism findings demonstrate that if a
particular area fascinates 100 surplus tourists each of them spending $100 per day which means $
10,000 is the new outlay of such area per day. If it continued over a 100 day period, the area
would collect a million dollars in fresh sales. These million dollars is then circulated to restaurant,
lodging, retail trade and amusement regions in quantity to how the tourist spends the $100. It may
quite possible that 30% of the million dollars would outflow of the district proximately to
overcome the costs of the goods acquired by the visitors that are not done in the local region that
is only the wholesale margins for such items should generally be comprised as direct sales
effects.  In direct sales $700,000 is left behind that might produce $350,000 in revenue inside the
tourism industries and maintain 20 direct tourism employments. Tourism industries are income
and labour intensive, interpreting a high percentage of sales into profits and consistent works.
The industry of tourism, sequentially, purchase goods and facilities from former industries and
pays out majority of the $350,000 in revenue in term of salaries and wages to its staffs. This

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 builds secondary financial effects in the state. The study forces the use of a sales multiplier of 2.0
to specify that every dollar of direct sales produces an additional dollar in subordinate sales in this
area. With the help of multiplier effects, the $700,000 in direct sales yields $1.4 million in entire
sales. These subordinate sales construct a surplus revenue and employment, subsequent in a total
influence on the region of $1.4 million in sales, $650,000 in profits and 35 jobs. Whereas it was
assumed that the numbers that are used here are honestly representative of what one has influence
discover in a tourism financial impact study. An additional study forces to recognize which areas
obtain the through secondary effects and maybe classify alterations in earnings and influences of
distinctive subdivisions of tourists (market sectors). One can also evaluate the effects of tax on
this outlay by relating limited tax rates to the applicable alterations in sales or profits. Instead of
aiming on visitor earnings, one could also evaluate the impacts of production or government
movement linked with tourism.
There are numerous other types of financial effects that are not usually enclosed in financial
impact valuations, however not directly. For instance:
 Variations in prices: tourism can occasionally expand the price of lodging and retail prices in
the region, commonly on a seasonal basis.
 Modifications in the quantity and quality of services and goods: tourism may cause an
extensive collection of services and goods accessible in an area that is of both higher and lower
value deprived of tourism.
 Changes in property and other taxes: taxes were paid to overcome the cost of limited
facilities might be higher or lower in the occurrence of tourism action. In certain circumstances,
taxes composed openly or ultimately from visitors may produce compact resident taxes for roads,
schools, etc. In other condition, natives may be taxed more severely to overcome the extra setup
and amenity costs. The influences of tourism on native government outlays and profits are spoken
to more entirely in an economic impact study.
 Financial proportions of “environmental” and “social” controls: There are also financial
significances of most environmental and social impacts that are not frequently spoken in a
financial impact analysis. These can be either positive or negative. For instance, transportation
mobbing will raise the costs of moving from place to place for either businesses or households.
Enriched facilities that appeal tourists may also inspire pensioners or various types of dealings to
track down in the region.
 Tourism’s Contribution to Economic Growth
Analysis of the various records approves that tourism, universal as well as domestic, should be
considered as an important constituent of financial motivation programs, particularly in periods of
financial crisis. It act as an financial catalyst which means that tourism should be dominant to
extent to aimed to recover economic development for the reason that the trade flows produced by
a strong tourism business and obligate a main consequence on trade and customer assurance, as

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 can be comprehended from the scale of the subsidiary financial consequences of tourism in the
T20 nations.
The comparisons among the financial catastrophe of 2009 and the profitable recovery in 2010,
illustrate that there is a significant alterations present among T20 states permitting to their
specific financial condition.

 Those states having stable economic development, profits from universal tourism
support to speed up development, growth rates in times of retrieval are difficult than those for
industrial development.
 In nations with feeble financial development, early findings about the improvement in
GDP progress in 2010 in association to 2009 specify that global tourism does not perform to
encounter potentials as a reason preferring financial repossession in a definite quantity of T20
states, particularly in Europe. Conversely, tourism’s restricted the involvement to the continuation
of financial growth most likely resembles only to a time-shift, since a very sharp improvement
can be seen in Europe’s important tourism nations in the leading half of 2011.

Therefore, the tourism region can show a main role in financial incentive strategies in return to
catastrophe conditions, administered that tourism is observed as a major constituent of such
strategies, as both a financial catalyst and a cause of job conception that balances other divisions,
particularly industrial.
Conclusion:
Tourism is one of the powerful operators of employment and wealth globally. Improvement in
poverty is one of the ultimate challenges globally. In spite of tempestuous times for the world’s
recession, these simple facts are not likely to change. If we focus on wealth creating power of
tourism on individuals most in need rests an enormous task and prospects.
Union minister Alphons lists achievements of tourism sector, says India has huge potential.
Tourism is increasingly becoming a major growth driver of India's economy, contributing around
$250 billion or 10 per cent of the country's gross domestic product (GDP) in 2018, the minister
said. In India, the share of tourism in GDP is around 7 per cent, and it contributes approximately
13 per cent to total employment.
India's revenue from travel and tourism stood at $234 billion. Before 2018, 81.2 million
people were employed in the tourism sector, the highest as compared to any other sector.
The minister complained that generally people do not smile. "Why can't we smile? Let's be a
nation that can smile. We all are fantastic," he said. (India Today, February 26, 2019)

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