The Economic Times, Last Updated: Aug 01, 2011
Without being inclusive, financial and economic stability cannot be sustainable. I am confident that most of us will agree with this statement. The challenge, however, is on fast-tracking execution of inclusion planning. In my view, micro, small and medium enterprises (MSME), agribusiness and tourism are three key drivers that can generate a huge multiplier impact to expedite our economic and financial inclusion objectives. In my previous article, I had written on the positive impact of MSMEs as a mission-critical inclusive-growth opportunity. Tourism is the second pillar that provides an effective delivery platform for inclusive growth.
Further, with its backward and forward linkages and local connect, tourism becomes an important driver of equitable growth and prosperity offering an alternative source of livelihood, development and growth of remote locations, preservation of local skills, enterprise development at the micro level, and sustainable environment management. Globally, tourism remains a critical economic sector, employing around 250 million people — 8% of global employment — accounting for over 9% of the world’s GDP and over 9% of global investments.
In India, while tourism is one of the largest employers, creating 78 jobs for every Rs 10 lakh of investment — and expected to create 37 million additional jobs in the next 10 years — it remains grossly underutilised as a means of creating sustainable financial inclusion. India has bountiful natural, cultural and monumental resources, and tectonic architecture that has not been effectively tapped. With higher economic growth, share of emerging economies in global travel and tourism GDP is expect to increase significantly over the next 10 years, as also highlighted in the WTTC report, Economic contribution of travel and tourism.
This trend is also amplified by the significant increase in tourism activity in the country in the last decade: a three-fold increase in domestic tourist visits to 650 million, and over a two-fold increase in foreign tourist arrivals to 5.6 million, driven by rising domestic travel, increased spending power and strong international positioning. However, while tourist inflow has significantly grown in India, we are still far from the latent potential. Even the best tourism destinations in India, such as Goa and Taj Mahal in Agra, are grossly underpenetrated as compared to their regional competitors such as Phuket and Great Wall of China.
So, how do we reap and maximise benefits of this Great Domestic Opportunity? The key challenges for India, as highlighted in various forums and in the recent Travel and Tourism Competitiveness Report, 2011, by the World Economic Forum, include lack of (a) quality infrastructure, (b) skills development, (c) conducive policy framework, and (d) coordination among various authorities. Considering the social and economic imperatives of tourism, an integrated effort is required to effectively address these challenges. A three-pronged approach is recommended as follows: Adopting PPP model to address infrastructure constraints: Public private partnership (PPP) has proved to be a successful model for accelerating development of tourismrelated infrastructure, particularly in the southern states including Karnataka, Kerala and Andhra Pradesh.
The same should be adopted by other states, especially in the regions that are lagging behind in terms of tourism development. Further, the expertise of the private sector should be used to implement larger tourism projects such as integrated tourism destinations, eco tourism, medical tourism, adventure tourism and golf tourism. Within the framework of PPP, a feasible solution lies in the ‘social equity model for inclusive growth’ that recognises the aspirations of the local community, and enabl es participation of the less advantaged in larger development efforts. This model attempts to holistically include the local community as a partner, and is an enabler of development linkages with the rural and semi-urban communities.
The model may be used to implement new tourism projects, especially in the areas of rural, agriculture, cultural, religious, and eco-tourism, where the development and involvement of the local community is equally important. Under this model, a special purpose vehicle or a cooperative is formed with equity from a promoter, private investors and social equity from the local community in the form of land allocation and local support. Government agencies and NGOs provide the necessary support with respect to fiscal concessions and facilitating the formation of synergetic partnerships between the local communities and promoters of the project. The management of the project is shared by the local community and the promoter. The involvement of the local community also ensures sustainability of the project due to the creation of employment and added revenue for the community.
Conducive policy frameworks for tourism development: There is a need to implement institutional frameworks that lead to synergistic development by coordinated participation from multiple authorities with a focus on tourism-related development. A steering committee on the tourism sector, constitution of National Tourism Board and further strengthening of the ministry of tourism shall help in formulating conducive policies that are favourable for tourism development. This would also lead to a high er number of tourists, local community and investor confidence. Leveraging technology: While the online travel industry has made travelling more convenient, the impact is still limited to online travel, railways and top-end hotel stays.
The next wave of technology intervention is critical to enhance the tourist experience, and further increase awareness of India as a tourist destination, particularly considering increase in competition for global tourist inflow. We sincerely believe that pan-India travel currency cards, online travel and hotel bookings, timely information exchange between stakeholders, availability of multilingual websites, virtual 360o tours on Websites, focused Internet advertising campaigns and effective use of social media can enable greater tourist inflows and seamless travel for tourists in India.
-By Rana Kapoor MD and CEO of Yes Bank