Impact of Tourism and Hospitality Industry on Indian Economy

T Z Ahamed

T Z Ahamed Assistant Professor, Department of Hotel Management and Catering Science, Madurai Kamaraj University College, Madurai

Keywords: GDP, Employment, Tax revenue, Foreign exchange, Infrastructure, multiplier effect

Abstract

Tourism contributes significantly to the economic development of a nation and for this reason governments are prepared to invest public funds for the development of tourism in a country. Public funds are invested in developing infrastructure such as construction of roads, airports, etc. and private investors are encouraged to construct hotels, resorts, and transportation because of the perceived economic benefits of tourism. India’s GDP has been growing at over eight per cent on an average since 2004 and is expected to touch the nine per cent mark in the coming years.

Governments encourage the development of tourism because of the income it can generate specially in terms of foreign exchange earned. The income generated by tourism has a positive impact on a country’s GDP, balance of payments, and government revenue. However some of the figures may be misleading unless they are corrected for leakages.