Tourism for Boosting Economic Growth and Development: An Analysis in the context of India in the Liberalized Era

Abstract

Tourism is globally the major service industry, both in terms of gross revenue and foreign exchange earnings. It is renowned to have a positive effect on long-run economic growth. On one hand, tourism sector stimulates other industries by direct, indirect and induced effects and on the other hand; it contributes in employment generation and causes positive economies of scale. Tourism sector holds immense potential for the Indian economy. Tourism is the sum total of the operation, mainly of an economic nature which directly relates to the entry, stay and movement of foreigners inside and outside a certain country, city or region. The significant impact of international tourism in stimulating economic growth is admirable. For this reason, the relationship between international tourism and economic growth seems to be an interesting and contemporary empirical issue. The current research paper attempts to estimatethe impact of tourism industry in boosting economic growth and employment generation in India in the Liberalized Era.Augmented Dickey-Fuller (ADF) for unit root, Johanson for cointegration and Granger causality test have been considered to examine the causal relation between GDP and receipts from tourism sector in India by using the data over the period of 1991- 2016. The findings of the study showed a positive and significant relationship between economic growth (GDP) and Travel and tourism in India. It also showed a significant relationship between economic growth (GDP) and employment.