Introduction

India stands at a critical juncture, struggling to translate its significant GDP growth into meaningful employment opportunities. The recent elections revealed voter dissatisfaction due to the scarcity of jobs and adequate livelihoods, indicating a pressing need for a new economic strategy. We must shift from focusing solely on GDP growth to also emphasizing employment growth. A promising solution lies in harnessing the largely untapped potential of the tourism sector.

Historical Economic Policies and Their Shortcomings

• Historically, India’s economic policies have oscillated between various sectors—heavy industries, agriculture during the Green Revolution, and structural adjustments post-1991—all aimed at boosting output rather than employment.
• This strategy has not yielded the desired employment growth, necessitating a new approach.
• If we re-evaluate sectors based on their capacity to generate both output and employment, tourism emerges as a key player with significant yet largely unexploited potential.

The Current State of India’s Tourism Sector

• Despite being the fifth largest economy globally, India ranks 39th in the World Economic Forum’s global tourism ranking, contributing a mere 1.6% to global tourism income.
• The sector’s share in India’s economy is a scant 0.9%, a decline from 2.7% in 2019-20, largely due to the pandemic.
• However, tourism is highly employment-intensive, with the 2022-23 Periodic Labour Force Survey (PLFS) showing it accounts for 5.5% of employment, far exceeding its GDP share.
• Furthermore, tourism’s indirect contributions, through its linkages with allied sectors, enhance its overall economic impact.

Potential of India’s Tourism Sector

• Economic Development:

• India’s rank on the World Economic Forum’s Travel & Tourism Development Index 2024 has risen to 39th place.
• The tourism sector contributes 7% to India’s GDP.
• Cumulative FDI equity inflow in the Hotel and Tourism industry was USD 17.1 billion (April 2000-December 2023), making up 2.57% of total FDI inflow.
• According to IBEF, travel and tourism contributed about USD 178 billion to India’s GDP.

• Employment Generation:

• Travel & Tourism generated 32.1 million jobs, accounting for 6.9% of total employment in 2021.
• The hospitality industry, including hotels, restaurants, and travel agencies, employs millions directly and indirectly.

• Tourist Arrival:

• Domestic tourism had over 1.8 billion visits in 2019, significantly boosting the economy.
• Foreign Tourist Arrivals (FTAs) in December 2023 were 1,070,163.
• FTAs for January-December 2023 were 9,236,108, compared to 6,437,467 in 2022.

• Top Destinations:

• Popular destinations include the Taj Mahal, Golden Temple, Goa beaches, Kerala backwaters, and hill stations in Himachal Pradesh and Uttarakhand.

• International Tourist Arrival:

• India’s coastline and beaches contribute to a projected travel market of USD 125 billion by FY27.
• International Tourist Arrivals are expected to reach 30.5 million by 2028.

• Job Opportunity:

• By 2029, tourism is expected to create about 53 million jobs.
• The industry’s direct contribution to GDP is expected to grow at an annual rate of 7-9% between 2019 and 2030.

• Business Growth:

• The travel market is projected to reach USD 125 billion by FY27, up from USD 75 billion in FY20.
• The Indian airline travel market, estimated at USD 20 billion, is expected to double by FY27.
• The Indian hotel market, valued at USD 32 billion in FY20, is projected to reach USD 52 billion by FY27, driven by increased travel demand and travel agent efforts.

Global Lessons in Leveraging Tourism

• Looking globally, the transformative power of tourism is evident. In Croatia, a country with a population of less than 4 million, tourism contributes 20% to GDP, leveraging its Adriatic coastline.

• Comparatively, India boasts a vast and diverse array of natural and cultural assets—an extensive coastline, the Himalayas, national parks, heritage sites, and religious destinations.
• In China, tourism contributes 11% of GDP, illustrating that size and potential are not the limiting factors for India, but rather a lack of policy focus and investment.

Way Forward

• To harness tourism’s potential, a fundamental shift in mindset among policymakers is required, alongside substantial resources and incentives to develop a robust tourism ecosystem.
• This includes improving travel infrastructure, accommodation, and high-quality services at tourist sites.
• The forthcoming budget presents an opportunity for the finance minister to break from tradition and allocate the necessary resources to accelerate tourism growth.

Conclusion

Investing in tourism can yield substantial economic and employment benefits, as well as valuable foreign exchange earnings. By recognizing and nurturing this sector, India can address its employment challenges and unlock a significant source of economic growth. With strategic investment and policy support, tourism can become a cornerstone of India’s economic and employment growth, offering rewards that extend far beyond GDP figures.