Relevance: GS III (Indian Economy – Employment & Infrastructure) | Source: The Hindu Business Line

1. The Context: Unlocking Potential

Despite India’s vast cultural heritage, the tourism sector remains underutilized. The article argues that India needs to move beyond marketing slogans (like “Incredible India”) and fix on-ground structural issues to become a $5 trillion economy.

  • The Goal: Transform tourism into a primary engine for employment generation and foreign exchange earnings.

2. Key Bottlenecks 

  • Infrastructure Deficit: While major airports have improved, “Last-Mile Connectivity” to actual tourist sites remains poor. A lack of basic amenities (clean public toilets, safe water) discourages high-spending international tourists.
  • Taxation Issues: India’s high Goods and Services Tax (GST) rates (18-28%) on luxury hotels make it expensive compared to competitors like Thailand or Vietnam.
  • Regulatory Friction: Complex inter-state vehicle permits and varied state taxes create logistical nightmares for tour operators.

3. Strategic Solutions 

  • Infrastructure Status: The sector demands “Infrastructure Status” (currently treated as commercial).
    • Benefit: This would allow hotels and resorts to access long-term loans at lower interest rates, reducing project costs.
  • One Nation, One Permit: Implementing a seamless All-India Tourist Permit system to allow vehicles to move freely across state borders without paying multiple entry taxes.
  • Niche Tourism: shifting focus to MICE (Meetings, Incentives, Conferences, and Exhibitions) and Medical Tourism (leveraging Ayurveda and affordable healthcare) to attract high-value visitors.

4. Key Data & Schemes

  • High Multiplier Effect: Tourism is labor-intensive. Data suggests that for every ₹10 lakh invested, tourism creates 78 jobs, significantly higher than the manufacturing sector (approx. 45 jobs).
  • Schemes:
    • Swadesh Darshan 2.0: A shift from “Circuit-based” development to “Destination-based” holistic development.
    • PRASHAD Scheme: Focused on developing infrastructure at pilgrimage and heritage sites.

UPSC Value Box

Concept / Scheme Relevance for Prelims
MICE Tourism Stands for Meetings, Incentives, Conferences, and Exhibitions. It is a specialized niche of group tourism dedicated to planning business events, often bringing in higher revenue per visitor than leisure tourism.
Swadesh Darshan 2.0 A revamped central sector scheme by the Ministry of Tourism. Unlike the original scheme (which focused on thematic circuits like Ramayana Circuit), 2.0 focuses on developing sustainable and responsible destinations with a tourist-centric approach.

With reference to the tourism sector in India, consider the following statements:

  1. The “Swadesh Darshan 2.0” scheme focuses on the development of thematic tourist circuits across the country.
  2. The tourism sector has a higher employment multiplier effect compared to the manufacturing sector for the same level of investment.
  3. Granting “Infrastructure Status” to the tourism sector allows access to long-term credit at lower interest rates.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)

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