Indian Tourism Sector Emmerging Oppurtunities -Emmerging Challenges and Oppurtunities in the Era of Globalisation

INDIAN TOURISM INDUSTRY -EMMERGING CHALLENGES AND OPPORTUNITIES IN THE ERA OF GLOBALISATION Dr. GUNDETI RAMESH [email  protected] com FACULTY MEMBER, DEPARTMENET OF ECONOMICS,SATAVAHANA UNIVERSITY, KARIMNAGAR,ANDHRAPRADESH. This paper mainly highlighted the Challenges and Opportunities of the Indian Tourism in the context of globalization. This tourism industry undoubtedly emerged as an instrument of rural employment generation as a labor intensive activity in a labor surplus economy, with its forward and backward linkages with a host sectors like tranport,hospitality and education etc.Finally the paper also makes proper policy suggestion needed communication to promote and boosting tourism in India. Key words: Compound Annual Growth rate (C. A. G. R), Foreign Exchange Earnings (FEE) Foreign Tourist Arrivals (FTA),Forward backward linkages INTRODUCTION: Tourism is not only a growth engine but also an export growth engine and employment generator. According to the Economic Survey 20 11-12 the sector has capacity to create large-scale employment both direct and indirect, for diverse sections in society, from the most specialized to unskilled workforce.It provides 6-7 per cent of the world’s total jobs directly and millions more indirectly through the multiplier effect, as per the UN’s World Tourism Organization. Since tourism does not fall under a single heading in India’s National Accounts Statistics, its contribution has to be estimated. Its contribution to GDP and employment in 2007-08 was 5. 92 per cent respectively as per Tourist Satellite Account Data. FTAs in India during 2010 were 5. 78 million compared to 5. 17 million during 2009, posting a growth of 11. 8 per cent, much higher than the growth of 6. per cent for the world in 2010. FEEs from tourism in rupee terms during 2010 were Rs. 64,889 crore compared to Rs. 54,960 crore during 2009 with a growth rate of 18. 1 per cent. Despite the slowdown and recessionary trends in the econom ies of Europe and America, FTAs during 2011 were 6. 29 million with a growth of 8. 9 per cent over 2010 and FEEs in 2011 were Rs. 77,591 crore with a growth of 19. 6 per cent. In the case of outbound tourism, the number of Indian nationals’ departures from India during 2010 was 12. 99 million with a growth of 17. per cent for the year. Domestic tourism has also emerged as an important contributor to the sector providing much needed resilience. Domestic tourist visits during 2010 are estimated at 740. 2 million, with a growth of 10. 7 per cent. However, Indian tourism industry is not only a growth engine, but also an export growth engine and employment generator. According to the Economic Survey 2011-12 the sector has capacity to create large-scale employment, both direct and indirect, for diverse sections of society, from the most specialized to unskilled workforce.It provides 6-7 per cent of the world’s total jobs directly and millions more indirectly through the mult iplier effect as per the UN’s World Tourism Organization. Its contribution to the GDP and employment in 2007-08 was 5. 92 per cent, respectively as per the Tourist Satellite Account Data. In India, the tourism sector has witnessed significant growth in recent years. During 2006 to 2011, the CAGRs of foreign tourist arrivals and foreign exchange Objectives of the study: 1)To study the emerging challenges and opportunities in the context of globalization. )To examine the trends of foreign exchange earnings growth of foreign tourists arrivals in Indian tourism. 3)To analyze the share of Indian tourism industry when compare to the rest of the world and the Asian and Pacific region. 4)To suggest the policy implications to develop the Indian Tourism Industry. Methodology: The study mainly based on a range of secondary data from various government sources such as ministry of tourism Government of India and other relevant websites etc. For analyzing secondary data simple statistical tools like percentages and averages have been used to interpret the data.A part from these tables, charts, graphs, pictures have been chosen at relevant places to easily understand the data. Observations India has significant potential for becoming a major global tourist destination. According to the World Travel and Tourism Council (WTTC) based on Tourism Satellite According Research (TSAR) in 160 countries has predicted that India has the potential to become the number one tourist destination in the world with the demand growing at not less than 10 percent for annum.The World Tourism Organization has also pointed out that India as the most favored destination among the countries of South Asia receiving more than 50 percent of the total foreign tourist traffic in the area. However India’s share in International tourist arrivals is 0. 59 percent. (Share of India in International receipts is 1. 54%) while its share in the country’s GDP is 12 percent. It has given employ ment to 10. 2 million people directly.Therefore the tourism is undoubtedly has emerged as an instrument of rural employment generation, as a labor- intensive activity in a labor surplus economy, with its forward and backward linkages with a host sectors like transport, hospitality education, health, banking etc,. The interested spending by tourists has generated substantial income earnings both public and private sectors. Therefore the income flow has a multiplier effect on the macro economy. However World Travel and Tourism Council pointed that India is one of the fastest growing tourism industries in the world and expected to grow by a further 6. annually and should create 13,127,000 employment opportunities by 2020. But post globalization and under GATS many changes and challenges are confronted. The table -1 depicts that the foreign exchange earnings through tourists. In terms of rupees tourism receipts have grown from rs. 7. 7 crore in 1951 to 12,150 crore in 1998, to rupees 15 ,626 crore in 2000 to 27,944 in 2004 and US million $ 16564 in 2011. Foreign Exchange Earnings (FEE) from Tourism in Indian Rupee terms and US $ terms FEE from tourism in Rupee terms during 2010 were Rs. 64889 crore as compared to Rs. 54960 crore during 2009 and Rs. 1294 crore during 2008. The growth rate in FEE in Rupees terms during 2010 was 18. 1% as compared to the growth rate of 7. 1% in 2009 over 2008. Therefore, the growth rate observed in 2010 over 2009 was substantially high FEE from tourism during 2010 were US $ 14193 million as compared to US$ 11394 million during 2009 and US $ 11832 million during 2008. The growth rate in FEE in US$ terms during 2010 was 24. 6% as compared to a decline of 3. 7% in 2009 over 2008. Therefore, in US$ terms, also growth rate observed in 2010 was positive and substantially high.Thus tourism recorded a positive and significant compound annual growth rate at 13. 82%, however in terms of US Dollar foreign exchange earnings also increased from US $ 2,889 million in 1997 to US $ 14,193 million in 2010. It is observed that there was a higher fluctuation noticed in the quantum of foreign exchange earnings in both in terms of dollars and in Indian rupee. The study also found the highest growth (Foreign Exchange Earning) rates with 43. 8 are recorded in 2003 and lowest growth rate with 7. 6 is recorded in 2001. Fig-2 gives the details of Foreign Tourists arrivals to India. FTAs in India during 2010 were 5. 8 million with a growth rate of 11. 8% as compared to the FTAs of 5. 17 million and growth rate of (-) 2. 2% during 2009. The 11. 8% growth rate in FTAs for 2010 over 2009 for India is much better than UNWTO’s projected growth rate of 5% to 6% for the world during the same period Foreign tourist arrivals to India rose from 0. 12 million in 1960 to 1. 68 million in 1991 and 3. 46 million in 2011 and6. 29 million in 2010. The study evidently speaks the truth that in terms of foreign tourist arrivals has registered a posit ive significant compound annual growth rate with 7 percent between 2000 and 2010.The study also pointed out that highest tourist arrivals growth rate registered with 26. 8 in 2004 and negative growth rate registered with -2. 2 in 2009. The reason for decrease in foreign arrivals may be due to slow down and recessionary trends in the economics of Europe and America . A top 10 source country for Foreign Tourist Arrivals (FTAS) in India in 2010 was placed in Table-3 It connotes the fact that the majority of the tourist arrivals are from the U. S. A registered with 0. 916 million. The data observed that out of total tourist arrivals 16. 40 percent tourist’s were from U.S. A and followed by U. K with 0. 755 million which contribute 13. 52 percent. The study mainly observed that in terms of foreign tourists arrivals to in India- U. S. A occupied first place (16. 40%) and Malaysia occupied with tenth position. The table-4 reveals the share of India in international tourist arrivals in the world, Asia and the Pacific region during the period of1997-2010. It is observed that foreign tourist arrivals in India have risen from 2. 37 millions in 1997 to 6. 17 million in 2009. In terms of share and rank of India in the world rose to 0. 40 in 1997 to 0. 59 in 2009.As the rank of India when compare to the world has come down from 47th rank in 1998 to 41 rank in 2009.. The study also pointed out that compare to share and rank of India Asia and the Pacific nearly increased with 2. 67 in 1997 to 2. 86 in 2009. However the study reveals the fact that the share of India in international tourist arrivals in the world, Asia and Pacific region 1997-2011 was not increased significantly but merely increased. The table 5 gives the fact that the share of top 10 states / UTs of India in number of foreign tourist visits in 2010. The study observed that 28. percent tourists are visiting Maharastra followed by Tamilnadu which comprising 15. 7 percent and followed by Delhi with 10. 6 p ercent. Finally the study explores the fact that 28. 5 percent foreign tourist visiting Maharastra and 2. 5 percent foreign tourist visiting to Goa state. Hotels and restaurants is an important component of the tourism sector. As on 31 December 2011, there were 2,895 classified hotel having a capacity of 1, 29,606 rooms in the country. Availability of good quality and affordable hotel rooms play an important role in boosting the growth of tourism in the country.The share of the hotel and restaurant sector in overall economy increased from 1. 46 per cent in 2004-05 to 1. 53 per cent in 2008-09 and then decreased to 1. 46 per cent in 2010-11. However, if the contribution of this sector only in the service sector is considered, its share decreased from 2. 75 per cent in 2004-05 to 2. 64 per cent in 2010-11 as other service sectors grew faster than this sector. It CAGR was 8. 44 per cent during 2004-05 to 2009-10 and the growth rate in 2010-11 was 7. 7 per cent. Health tourism, the new entrant in the sector is a niche area where India has good potential.Findings The study mainly pointed out that India has significant potential for becoming a major global tourist destination. The Tourism Industry has grown significantly during the study period and registered a compound annual growth rate of 7 percent in foreign tourist arrivals in to India. The study also found that highest growth rate (foreign exchange earnings) with 43. 8 are recorded in 2003 and lowest growth rate with -7. 6 in 2001. The study also explores the fact that the highest tourist arrivals growth rate registered with 26. in 2004 and negative growth rate registered with -2. 2 in 2009. The study observed that in terms of foreign tourist arrivals to India ,U. S. A. occupied first place (16. 40 percent) and Malaysia occupied tenth position. From the share of India and the Pacific region 1997-2011 was not significantly performed but substantially increased. India achieved 5,717 of international tourism rece ipts in the world and Asia, Pacific regions, and has jumped in leaps and bounds from a ranking of 36 to 16th position in the world and from 10th position to 6th position in the Pacific region.Coming up to the other findings the share of India in international tourist arrivals is only 0. 59 percent and tourism receipts are only 1. 54 percent and ranks 16 only. The major shortcoming of the tourism is inadequate capacity (e. g. 85,481 hotel rooms as against 8, 97,206 in China) and costly travel (e. g. soaring fuel, surcharges, poor blight management etc,. ). Inadequate infrastructure and trained manpower, lapses in security and safety (e. g. Terrorist attacks and harassment of tourists) and poor organization (e. g. fragment market, poor advertising and un trained tourist guides.Moreover there is need of well equipped infrastructure and management to meet the high international standards and need of skilled management to benefiting from the opportunities thrown open by (GATS, WTO) to to urism. There is need to develop the alternative tourism like health tourism village tourism and sports tourism and it is needed to take more initiation by the involving government and private agencies for more investments to develop tourism sector. Conclusions Tourism undoubtedly has emerged as an instrument of employment generation.However to take the emerging challenges and opportunities of globalization, India needs a long term plan for this industry with periodic evaluation and revision. Therefore there is a need future vision to identify the potentials of tourism industry. Finally the success of tourism depends to a large extent on better access to infrastructure, with a consumer centric approach. Appendix Tables Table-1 FEE from Tourism in India (in Rs. Crore) (1997-2011) YearFEE from Tourism inPercentage (%) change over the previous years India (in US$ MILLONS) 199728892. 0 199829482. 0 199930092. 1 2000346015. 20013198-7. 6 20023103-3. 0 2003446343. 8 2004617038. 2 200574932 1. 4 2006863415. 2 20071072924. 3 20081183210. 3 200911136-5. 9 2010 #1419327. 5 2011 #1656416. 7 2012(#Jan – June) 84558. 2 # Advance Estimates, @ Growth rate over Jan-June 2011 Source: i) Reserve Bank of India, for 1997 to 2008 2)MTM1997-2011 figure-1 FEE from Tourism in India (in Rs. Crore) (1997-2012) TABLE 2 Foreing Tourist Arrivals (FTAs) in India, 1997-2012 YearFTAs in India (in Million)Percentae (%) change over the previous year 19972. 373. 8 19982. 36-0. 7 19992. 485. 2 20002. 656. 7 20012. 4-4. 2 20022. 38-6 20032. 7314. 3 20043. 4626. 8 20053. 9213. 3 20064. 4513. 5 20075. 0814. 3 20085. 284 20095. 17-2. 2 20105. 788. 1 2011 (P)6. 298. 9 2012(jan-Jun)3. 247. 4 (P) Provisional, @ Growth rate ove Jan-June, 2011 Source: (i) Bureau of Immigration, Govt of India, for 1997-2009 (ii) Ministry of Tourism, Govt. of India, for 2010 & 2012 TABLE 3 Foreing Tourist Arrivals (FTAs) in India, 1997-2011 S. NoSource CountryFTAs (in Million) (P)Percentge (%) Share 1USA0. 91616. 4 2U K0. 75513. 52 3Bangladesh0. 3816. 82 4Canada0. 2404. 3 5Germany0. 2244. 01 6Sri Lanka0. 2193. 2 7France0. 2183. 9 8Japan0. 1652. 95 9Australia0. 1642. 94 10Malaysia0. 1602. 87 Total of top 10 countries3. 44261. 64 Others2. 14238. 36 All countries5. 584100. 00 (P) Provisional, @ Growth rate ove Jan-June, 2010 Source: (i) Bureau of Immigration, Govt of India, for 1997-2009 (ii) Ministry of Tourism, Govt. of India, for 2010 & 2011 Table-4 Share of India in International Tourist Arrivals in World, and Aisa & the Pacific Region, 1997-2010 YearInternational Tourist Arrivals (in million)FTAs in India (in million)Percentge (%) shre and rank of India in worldPercentage (%) hare and rank of India in Asia and the Pacific WorldAsia and the Pacific%ShareRank%ShareRank 1997593. 089. 02. 370. 40-2. 67- 1998611. 088. 32. 360. 3947th2. 67- 1999633. 097. 62. 480. 3946th2. 54- 2000683. 3109. 32. 650. 3950th2. 4211th 2001683. 4114. 52. 540. 3751st2. 2212th 2002703. 2123. 42. 380. 3454th1. 9312th 200369 1. 0111. 92. 730. 3951st2. 4411th 2004762. 0143. 43. 460. 4544th2. 4111th 2005803. 4154. 63. 920. 4943rd2. 5311th 2006846. 0166. 04. 450. 5344th2. 6811th 2007894. 0182. 05. 080. 5741st2. 7911th 2008917. 0184. 15. 280. 5841st2. 8711th 2009882. 0180. 95. 170. 5941st2. 611th 2010(P)940. 0203. 85. 580. 5940th2. 7411th P: Provisional Source: i) UNWTO Tourism Market Trends 2007 edition, for the years upto 2005 ii) UNWTO Barometer June 2010 for 2006 and January 2011 for 2007 and UNTO TABLE 5 Share of Top 10 States/Uts of India in Number of Foreign Tourist Visits in 2010 RankState/UTForeign Tourist Visits in 2010 (P) NuberPercentae share (%) 1Maharashtra508312628. 5 2Tamil Nadu280468715. 7 3Delhi189365010. 6 4Uttar Pradesh16751239. 4 5Rajasthan12785237. 2 6West Bengal11921876. 7 7Kerala6592653. 7 8Bihar6357223. 6 9Himachal Pradesh4536162. 5 10Goa4410532. 5Total of top 10 countries1611695290. 3 Others17358259. 7 Total 17852777100. 00 P: P Source: State/UT Tourism Departments Note: i) Figures for Chhattisgarh has been estimated ii) For some states data adjusted using the information available with Ministry of Tourism References 1 Reserve Bank of India, for 1997 to 2008 2 MTM1997-2011 3 Bureau of Immigration, Govt of India, for 1997-2009 4 Bound, John and Timothy Waidmann, (2000), Accounting for Recent Declines in Employment Rates among the Working – Aged Disabled, NBER Working Papers 5 Ministry of Tourism, Govt. of India, for 2010 & 2011 UNWTO Tourism Market Trends 2007 edition, for the years upto 2005 7 UNWTO Barometer June 2010 for 2006 and January 2011 for 2007 and UNTO 8 Driedger, D, (1987), Disabled People and International Air Travel, Journal of Leisurability, 14, pp. 13–19. 9 Miller, G. A. , & Kirk, E, (2002), The Disability Discrimination Act: Time for the stick? Journal of Sustainable Tourism, 10(1), pp. 82–88. 10 McKercher, B. , T. Packer, M. Yau, and P. Lam, (2003), Travel Agents: Facilitators or Inhibitors of Travel for People with Disab ilities, Tourism Management, 24, pp. 465–74. 11. Economoc survey 2011-12