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Tourism: Do Not Neglect a Sector Offering High Economic Rewards
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Context
The discourse surrounding India's economic strategy emphasizes the need to focus on employment growth alongside GDP growth. The tourism sector emerges as a potential solution to address unemployment challenges while contributing significantly to economic development.
Significance of Tourism in Economic Growth:
- Employment Intensity: Tourism's share in employment (5.5%) is more than five times its share in GDP (0.9%), according to the 2022-23 Periodic Labour Force Survey.
- Economic Multiplier: The combined direct and indirect share of tourism in GDP is 1.8%, while its total employment share reaches 12.6% (76 million persons).
- Growth Potential: Restoring tourism's direct GDP share to pre-pandemic levels (2.7%) could increase total employment to 95 million, with further growth to 5.4% potentially creating 195 million jobs by the end of the decade.
Global Comparisons and India's Potential:
- Croatia Example: Despite its small size, tourism accounts for 20% of Croatia's GDP, highlighting the sector's potential.
- China's Tourism Sector: Tourism contributes 11% to China's GDP, demonstrating its significance even in large, manufacturing-focused economies.
- India's Underutilized Assets: India's vast coastline, mountains, cultural heritage, and religious sites offer immense untapped tourism potential compared to other countries.
Policy Recommendations and Challenges:
- Mindset Shift: Policymakers need to recognize tourism's potential in optimizing both GDP and employment growth.
- Resource Allocation: The upcoming budget should provide adequate resources and incentives to accelerate the sector's growth.
- Ecosystem Development: Investments in travel options, hotels, and high-quality services at tourism sites are necessary to boost the sector.
UPSC Mains Questions:
Q. Analyze the potential of the tourism sector in addressing India's employment challenges. How can policymakers leverage this sector to optimize both GDP and job growth?
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