I.

INTRODUCTION

Tourism is a most desirable human activity; which is capable of changing the socio-cultural,
economic and environmental face of the World. Tourism is one of the largest and fast growing
industries in the world; it has the potential to influence the living pattern of communities. It is
one of the most important channels of cultural exchange which breaks down the barriers between
people of different parts of the world. It is the collection of activities, services and industries that
deliver a travel experience including transportation, accommodation, eating and drinking,
establishments of retail shops, entertainment, business and other hospitality services provided for
individuals or groups of travelling away from home.

Tourism has emerged as a key sector of the world economy and has become a major workforce
in global trade. It has been making a revolutionary and significant impact on the world economic
scenario. Tourism has been identified as the major export industry in the world. The multifaceted
nature of this industry makes it a catalyst to economic development and helps balanced regional
development. It is a low capital, labour intensive industry with economic multiplier and offers
opportunity to earn foreign exchange at low social cost. Tourism industry acts as a powerful
agent of both economic and social changes. It stimulates employment and investment, alters
structure of an economy, significant contribution toward foreign exchange earnings and
maintaining favorable balance of payment

Tourism sector creates direct, indirect and induced employment. It produces a vast spectrum of
employment from highly qualified and trained mangers of star hotels to room boys, sales girls
and artisans. With its faster growth new horizons of employment open up for youth of the
developing countries.

TOURISM IN INDIA

Tourism in India is economically important and is growing rapidly. The World Travel and
Tourism Council calculated that tourism generated 14.02 lakh crore (US$220 billion) or 9.6% of
the nation's GDP in 2016 and supported 40.343 million jobs, 9.3% of its total employment. The
sector is predicted to grow at an annual rate of 6.8% to 28.49 lakh crore (US$440 billion) by
2027 (10% of GDP). In October 2015, Indias medical tourism sector was estimated to be worth
US$3 billion. It is projected to grow to $78 billion by 2020. In 2014, 184,298 foreign patients
traveled to India to seek medical treatment.

About 88.90 lakh (8.89 million) foreign tourists arrived in India in 2016 compared to 80.27 lakh
(8.027 million) in 2015, recording a growth of 10.7%.Domestic tourist visits to all states
and Union Territories numbered 1,036.35 million in 2012, an increase of 16.5% from 2011. In
2014, Tamil Nadu, Maharashtra and Uttar Pradesh were the most popular states for
tourists. Delhi, Mumbai, Chennai, Agra and Jaipur have been the five most visited cities of India
by foreign tourists during the year 2015. Worldwide, Delhi is ranked at 28 by the number of
foreign tourist arrivals, while Mumbai is ranked at 30, Chennai at 43, Agra at 45, Jaipur at 52
and Kolkata at 90.

The Travel & Tourism Competitiveness Report 2017 ranks India 40th out of 136 countries
overall. The report ranks the price competitiveness of India's tourism sector 10th out of 136
countries. It mentions that India has quite good air transport (ranked 32nd), particularly given the
countrys stage of development, and reasonable ground transport infrastructure (ranked 29th).
The country also scores high on natural and cultural resources (ranked 9th). Some other aspects
of its tourism infrastructure remain somewhat underdeveloped however. The nation has very few
hotel rooms per capita by international comparison and low ATM penetration. The World
Tourism Organization reported that India's receipts from tourism during 2012 ranked 16th in the
world, and 7th among Asian and Pacific countries.
The Ministry of Tourism designs national policies for the development and promotion of
tourism. In the process, the Ministry consults and collaborates with other stakeholders in the
sector including various Central Ministries/agencies, state governments, Union Territories and
the representatives of the private sector. Concerted efforts are being made to promote new forms
of tourism such as rural, cruise, medical and eco-tourism. The Ministry also maintains
the Incredible India campaign focused on promoting tourism.

IMPACT ON INDIAN ECONOMY

Tourists contribute to the economy as their expenditure. As a result the economic impact
assessment focuses on the changes in employment, sales and income of the economy resulting
from tourism activities. So the economic impact of tourism covers the effects of visitors in an
area, their performances and their spending. These effects include the economic changes like:-

1. Earnings including wages, dividends, interest, rent and profits

2. Business proceeds

3. Employment generation

4. Value added to the gross domestic and regional products

5. Changes in the foreign exchange rates etc.

As a result tourism is considered as a vehicle for economic development. International tourism is

an invisible export. Where, currency flows from foreign country to the tourist country. So it
directly contributes to the balance of payment current account. This flow generates employment,
business turnover, household income and government revenue. This primary effects lead to the
secondary effects of further economic activity. The primary sectors which directly affected by
tourism are amusements, lodging, transportation, retail trade and restaurants. The positive
economic effects of tourism can be understood under through the generation of national income,
generation of foreign exchange, raising of tax revenue, expansion of employment opportunities
and transformation of regional economy.

Generation of National Income

The tourism industry contributes 7.3 per cent of GDP and accounts for 6.5 per cent of total
exports. In addition to this tourism sector contribute 2.7 per cent of the total employment in the
economy. As it is a highly labour intensive industry it provides employment to skilled, semi-
skilled and unskilled persons. The labour-capital ratio is highest in this sector. Women workers
are also high in this sector and they are employed in different sectors like travelagencies, cultural
activities airline services, handicraft and hotels. If the direct employment is 1 in the tourism
sector, the generated employment is 1.358 persons in other sectors of economy due to linkages
with tourism (Ganesh & Madhavi, 2007).

Raising of Tax Revenue

Tourism also contributes to the economy as tax revenue. In India for the tourism promotion, we
are giving tax concession to a lot of related industries. It accounts for 1.15 per cent of the total
tax revenue. With the imposition of higher taxes, the restoration process of destinations, which
involves fund, can be done by the government. Tourism taxes may be in the following forms:

1. VAT and excise duties

2. Wealth and transaction taxes

3. Local taxes

4. Social contribution

5. Generation of Foreign Exchange

The foreign exchange earnings of the country increased from Rs. 2613 crore in 1990 to Rs.
123320 crore in 2014. The average annual growth rate of foreign exchange earnings was 14.5 per
cent in 2014. Foreign exchange earnings from tourism show an increasing trend over the years. It
was Rs. 123320 crore in 2014 as compared to Rs. 107671 crore in 2013. The growth rate of the
earnings in 2014 was 14.5 per cent as compared to 14 in 2013 per cent. On the other hand,
foreign exchange earnings in US$ terms in 2014 were US$20236 million with a growth rate of
9.7 per cent, as compared to US$ 18445 million in 2013.

Transformation of Regional Economy

Tourism also contributes to the transformation of unknown villages into internationally known
places. These unknown villages were initially characterized by depressed economic activities and
inhabited by traditional rural folks. Later the introduction of tourism contributes to the
international recognition and higher economic development.

Conclusion
Thus to conclude, we can say that Indian tourism has a vast potential for generating employment
and foreign exchange earnings. Since it is a multi-dimensional and service oriented industry all
divisions of the Central and State governments, private sector and voluntary organizations
become active partners in the attempt to attain sustainable growth in tourism of the country. The
total number of foreign tourist arrivals in the country has augmented several times. It showed an
increasing trend except few years during the study period. It denotes that the Indian government
is giving attention both on the development of the tourism and linked almost all the known
tourist spots by road, railway and civil aviation. The foreign exchange earnings of the country
through tourism has increased more than seven times from 2000 to 2014. It proves that the
economical, political and social amity has positive impact on the arrival and receipts of the
tourist industry in countries.