Statsguru: Tourism industry shows recovery but challenges remain

As the world celebrates Tourism Day on September 27, it is an opportune time to assess the performance of the sector and the challenges faced by it in India. 

Tourism’s contribution to gross domestic product (GDP) is steadily approaching pre-pandemic levels, as highlighted in the latest 2024 report from the World Travel and Tourism Council. 

In 2023, tourism accounted for 6.5 per cent of GDP, drawing closer to the 2019 share, with projections indicating an increase to 6.8 per cent in 2024 (Chart 1).

Despite this recovery, the tourism sector is facing a year-on-year decline in the share of jobs created. While the absolute number of jobs has risen, surpassing even pre-pandemic levels, the proportion of employment generated by tourism continues to shrink (Chart 2).

Driving this recovery in Indian tourism is a remarkable surge in domestic travel. Recent data from the tourism ministry shows that the number of domestic tourists has surpassed pre-pandemic levels, reaching 2.5 billion in the calendar year 2023 compared to 2.32 billion in 2019 (Chart 3).

The Covid pandemic severely impacted foreign tourists to India as arrivals plummeted to fewer than 3,000 in April 2020. The sector is now on a path to revival. Although arrivals improved in 2023-24 compared to the pandemic years, they remain lower than in 2019-20.

However, Indian outbound travel has soared, hitting a new high of 28.2 million in 2023-24, up from 25.9 million in 2019-20.  The gap between the two— foreign tourists to India and outbound tourists from the country narrowed in 2023-24 compared to the Covid-hit 2020-21, but the latter was still around three times the former (Chart 4).

The sharp recovery in Indian travellers venturing abroad is evident in the rise of the country to 8th place in 2023 from 14th in 2019 in terms of top tourism spenders. This shift confirms India's growing importance as a key source market in the global tourism landscape (Chart 5).

Forex earnings from tourism have also shown signs of recovery, surpassing pre pandemic levels in 2023-24 (Chart 6).

It should be noted that since India has improved its ranking in top spenders as well as a high number of outbound tourists from India, there may have been an increase in the forex outflows as well.