Foreign Tourists Arrivals and Foreign Exchange Earnings in India
By Dripto Mukhopadhyay
With declining impact of global recession, especially in develped countries, Indian tourism has seen an increase in foreign tourists arrivals to various destination in the country. This is important not only becauseof tourism is one of the high revenue earning activities in the country and also generates substantial employment and related multiplier effect, but also because tourism is a source of significant foreign exchange earnings (FEE) for the country. In this article, I have tried to show the recent trend in FTA and FEE over last two years or so. The following graph provides foreign tourists arrivals (FTA) to India from January 2012 till Febryary 2014. The graph clearly exhibits the seasonal changes in FTA which is a typical characteristics in trend of FTA in India . However, f one looks carefully once sees that the picks and the troughs are at a higher level as the years progress. Total number of FTA during 2012 was 6649 thousands which reached to 6848 by Decmber end of 2013. The first two months of 2014 have experience significant higher number of FTAs on a month-on-month basis compared to 2013 and 2012. This leaves no space for doubts that FTA which was affected significant during 2008 and 2009 has been recovered.The moment we look into growth trend over last 26 months, it show an interesting and striking feature. There is a peculiar similarity in growth pattern of FTA and FEE in certain period of the year 2012 and 2013.
1. The growth rates of FTA and FEE during the month of April are negative and in both years FTA growth is much lower compared to FEE.
2. In month of July for both years, FTA and FEE growth rates are significantly high and FEE growths are higher than FTA growth rates
3. Again in the month of October for both year, FTA and FEE gorwths are highest in the year and in bot years FTA growth is much higher compared to FEE growth.
This peculiar similarity suggest that there exists a definitive spending pattern in both years, which is aparantly looks quite a puzzle. The reason is since foreign tourists visit India from different countries and also with different affordability level, obviously similar changes in spending pattern is not expected unless the visiting pattern emerged over years has taken a definitive shape. But this has been proven as a reality which certainly requires attention from researchers and policy makers and other stakeholders in Indian tourism industry. This poses a serious research question. How the spending pattern is changing? Is it increasing or decreasing over time? is it that during a speific period of the year a specific tourists segments is visiting the country? If so, what is the reason behinf that? Just to have a simple response to these question, I have computed foreign exchange earling per foreign tourist arrival in India. The following figure provides the same at constant prices. This enables us to remove the inflation effect. Interesting finding is FEE per FTA fluctuates significantly during various months in each year. And, the pattern it followed in over months in 2012 and 2013 are quite similar. Without going into details like actually foreign tourists spending per person has seen a decline or not etc., is it that a particular section of foreign tourists in terms of affordability travel to india during a certain time period? Or, is it a special group of tourists for a particular cirsuit or so? Are they from same countries or different countries? This trend has a significant policy implication for Indian tourism.
Perhaps a detailed study over a larger time span with detailed data on country-wise arrival for each month, destinations traveled in each month etc, will be able to provide a much better clue to this puzzle which may become an important policy prescription for Indian toruism poicy makers for the Central Government as well as various State Governments.