Tuesday, November 10, 2009

Incredible India struggles for an incredible recovery

S Kalyana Ramanathan / London November 11, 2009

A two-year long global recession, Mumbai terror attack and then swine-flu, each coming on the back of the other. The tourism industry in India could not have expected anything worse than this. It however is starting to see its own green-shoots popping up. October 2009 saw the rate of fall in foreign tourist arrivals making a sharp decline to less than one percent against a 17 per cent fall in January 2009 (over January 2008). The Ministry of Tourism believes this is the beginning of recovery of the industry and things can only get better from here.

India’s Union tourism minister, Selja, addressing the media here on the eve of the World Tourism Mart in London said with 6 per cent of GDP and 9 per cent of employment in India coming from tourism industry, recovery of this industry will be paramount to the overall economic recovery as well. Global recession should have ideally driven more foreign tourists to India, given that money travels much farther in a relatively low cost economy like India. But the November 2008 terror attack in Mumbai and mid-2009 swine flu scare denied India to cash in on this opportunity, she said.

Selja said the next big opportunity for India’s tourism industry will be the Commonwealth Games that Delhi will host in October 2010, when nearly 100,000 tourists are expected to arrive during the 15-day period. The minister assured that Delhi will be ready with the estimated demand for 40,000 hotel rooms during the games. “We already have 10,000 and by mid next year, we should be ready with the rest,” she said.

Between January and July 2009, fall in arrival of tourists was successfully arrested from a peak fall of 17.6 per cent in January to a growth of 0.6 per cent in July 2009. However, arrivals dropped sharply again in August to 8.6 per cent and another 4.1 per cent in September, following fear of swine-flu. Despite the optimism of a gentle recovery, the overall numbers for the full year 2009 is expected to be lower than 2008.

In 2008, India welcomed 5.3 million tourists, while the arrivals between January and October 2009 has been only 4.2 million, suggesting the last two months of this year will not make up for the shortfall witnessed until October 2009.

Despite the fall in foreign tourist arrivals, foreign exchange earnings in US dollar terms has improved considerably. While the forex earnings in January shrunk by a third over January 2008, it had increased by 17.8 per cent in October, due to the weakening of the dollar against the rupee (and other major currencies). However the overall earnings between January and October this year is still 10.3 per cent less than the earnings for the same period last year.

Despite the recession, US and UK continue to hold the top two slots for “source countries”, contributing 15.73 per cent and 15.67 per cent, respectively. The position of these two countries and their contribution to arrivals has remained unaltered over the last two years.

The minister said state- owned India Tourism Development Corporation could be one of the PSUs in which the Union government can disinvest.

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