Impact of Tourism on Economy

Topics: Tourism, Economics, Economy Pages: 10 (2891 words) Published: August 4, 2013
Impact of Tourism On Indian Economy - A Snapshot
Auroubindo Ganesh1, Dr. C. Madhavi2

Globalization of development programmes has raised the foreign exchange requirements of developed as well as the developing countries. A number of manufacturing and non-manufacturing, traditional and non-traditional industries, no doubt, have helped them in their stupendous task of industrial transformation but at the same time, the harmful side effects have resulted in atmospheric pollution. In addition, the inadequacy of financial resources has also been an important barrier in speeding up the process of economic transformation. The magnitude of competition is found at peak, which necessitates world-Class excellence for excelling competition. Amidst all these constraints, the development of tourism industry appears to be an important solution. Tourism, both international and domestic, brings about an intermingling of people from diverse social and cultural backgrounds, and also a considerable spatial redistribution of spending power, which has significant impact on the economy of the destination area. We do not find any exaggeration in the opinion that tourism or travelling business has been declared an industry since with the least possible investment~ this industry bears the efficacy of earning more. The developing countries have points in favour of tourism industry which shows multiplier effects

and simplifies the task of manpower planners, env ironmentalists, social scientists and economists. An analysis of positive effects makes it clear that to be more specific the developing countries like ours should change our priority order and should give due weightage to the development of tourism industry. The tourism is now rightly added to the long list of established industries with tremendous economic and social potentiality. The income generation and employment capability of the industry are quite considerable. In fact tourism industry especially for developing countries acts as a greatest leveler in time of economic recessions. This chapter presents the impact of tourism industry in India with regard to various fronts such as economic front, social front, cultural and historical front, environmental front and political effects.

Economic Front
The tourism must be utilized as a vehicle for economic development. International tourism is an invisible export that creates a flow of foreign currency into the economy of a destination country, there by contributing directly to the current account of the balance of payments. Like

Research Scholar, Department of management studies, Annamalai University.1 Professor, Department of management studies, Annamalai University.2

Journal of Contemporary Research in M anagement, Volume-1, No.1, 2 Jan - June 2007


other export industries, this flow of revenue creates business turnover, household income and employment and government revenue. The generation process does not stop at this point however some portion of the money received by the business establishments, individ.uals and government agencies is re-spent within the destination economy there by creating further rounds of economic activity. The secondary effects can in total considerably exceed in magnitude the initial direct effects. Moreover, tourism seems to be more effective than other industries in generating employment and income in the less developed often-outlying regions of a country where alternative opportunities for development are more limited. Indeed, it is these areas that tourism can make its most significant impact. The introduction of a tourism industry into such areas can have a proportionally very much grater effect on the welfare of the resident population that the same amount tourism have on the more developed parts of the same country. The development of tourism, especially in an underdeveloped part of a country, requires the existence of an infrastructure, as well as hotel accommodation and other...
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