Contribution to foreign exchange earnings from tourism

[mikaya]

Tourism is perhaps the only ‘marketed’ or ‘marketable’ product which results in enormous transfer of funds. Even though this industry in India is short of foreign grants, it can bring valuable foreign exchange to the country and particularly a state like Kerala, without any exchange or export of merchandise. During the period 1951-2001, India achieved a compound growth rate of 16.2 percent in foreign exchange earnings as against the world average of 13.5 percent. Due to the increase in the number of tourists going out on a holiday Kerala
also could gain much particularly after the liberalization of the Indian economy. While the international tourist is now flocking to the beach resorts in the state and also the houseboats in the backwaters, the domestic tourist is also now emerging as a major customer due to the availability of extra money in their hands.

Income from international tourism can be phenomenal in the form of foreign exchange earnings. It adds to the national income and, as an invisible export, may offset a loss on the visible trading account, and will be of critical importance in the overall financial reckoning. This is truer in the case of developing countries like India. Foreign exchange earnings as a percentage of the total invisible earnings in India are continuously increasing with each passing year.

For many developing countries, which are mainly dependent upon primary products such as a few basic cash crops, tourism offers a more reliable form of income. In the case of some European countries like Spain, Portugal, Austria, Yugoslavia and Greece, the invisible earnings from tourism are of a major significance and have a very strong positive effect on the balance of payments.

Tourism has totally reshaped the economies of Japan, Hong Kong, Italy, France, Singapore and Mauritius. Even countries in Eastern Europe which were shy and hesitant in the beginning, have now accepted the basic philosophy underlying tourism and have liberalized rules and regulations to allow free flow of tourist traffic from abroad.