CHAPTER 6 ECONOMIC IMPACT OF SPIRITUAL TOURISM ON UTTARAKHAND Tourism has been globally recognized as one of the important economic activities. Selected countries enjoy the privilege of being a hub of spiritual activities that attract tourists from all over the world apart from the domestic tourists. The Vatican City, the United Arab Emirates are some such countries whose economies are greatly dependant on the spiritual heritage. Uttarakhand is also known for its spiritual establishments. Thus, it is logical to analyse the impact of spiritual tourism in the context of the state s economy. The following sections present some analysis of spiritual tourism in Uttarakhand vis-à-vis its economy based on the available data from various sources and the data collected during this investigation. 6.1 INTRODUCTION Tourism is considered as one of the largest economic activities in the world, and perhaps the largest in the services sector. It is also one of the fastest growing sectors of the world economy. Tourism is vital for many countries, due to the income generated by the consumption of goods and services by tourists, the taxes levied on businesses in the tourism industry, and the opportunity for employment in the service industries associated with tourism. Tourism has its own direct and indirect effect on society which is regarded as an effective instrument of country s economic development. Tourism, as a major service sector industry in world economy, has multidimensional impacts on the society. Glenn Kreag of University of Minnesota, in a report submitted in 2001, has identified the impacts of tourism into seven general categories (Kreag, 2001). These impacts are shown in Figure 6.1. These impacts are Economic, Social 147
and Cultural, Environmental, Crowding and congestion, Community attitudes, Services and Taxes. Kreag further analyzed that each of these impacts has both positive and negative aspects. Some of the features that describe the impact of tourism on economy are illustrated in the Figure 6.2. Tourism brings capital to a state s economy, improves a state s infrastructure, and creates ample business opportunities in sectors like food, transport, and hospitality. However at the same time, it could adversely affect the state s economy by contributing to price rise, creating temporary scarcity of land, labour, and housing etc. Thus, it is necessary to adopt a scientific approach to analyse the possible impacts of tourism in the economy of a state that has significant tourism potential. Appropriate strategy to tap these potentials could yield effectively for the state s economy. Taxes Economic Services TOURISM Environmental Community attitude Social and Cultural Crowding and congestion Figure 6.1 Impacts of tourism (Adapted from Kreag, 2001). Uttarakhand, the 27 th state of India, also known as the abode of Gods, is one such state in India which offers variety of experiences to the tourists. It is primarily a hilly state with only about ten percent of its total geographical area in the plains. According to a report of Uttarakhand Tourism Board, 2008, Uttarakhand economy mainly relies on tourism industry. Uttarakhand, being situated on the foothills of Himalayas, comprises of 148
numerous hill stations which attract tourists from across the globe thereby bringing money to the state. The wildlife has also been a major attraction for tourism as tourists come to visit the wildlife sanctuaries such as Corbett National Park and the famous Tiger Reserve. The other major aspect of tourism in the state is the spiritual tourism. The state is the home of number of spiritual centers. Thus, the state witnesses an inflow of tourists visiting different places for spiritual activities. The Uttarakhand economy is all poised to take advantage of this situation and expand its tourism sector. The two inputs that are considered necessary for the development of this sector, i.e., natural and human capital, are abundantly available in the state. Thus, it has the potential to match the rise in tourism demand with an increase in supply of tourism services. Positive Impacts State s Economy Tax Revenue Employment Improves transport Infrastructure Creates new business opportunities Improves local economy ECONOMIC IMPACTS OF TOURISM Negative Impacts Increases Cost of Living Increases potential of man-power import Cost for additional infrastructure Seasonal tourism creates high risks, under unemployment issues Figure 6.2 Impact of tourism on economy (Adapted from Kreag, 2001). Total forest reserve area in Uttarakhand accounts for 65% of the total land area of the state, which is 4.53% of India s forest area. Further, with more than three-fourths (78%) of its total population dependent on agriculture for livelihood, the economy of Uttarakhand is predominantly dependent on mountain agriculture. The major financial sectors in Uttarakhand have been identified as Agriculture, Natural Resources, Industry, 149
Real Estate and Tourism. Uttarakhand being situated in the foothills of the Himalayas comprises of numerous hill stations/wild life sanctuaries, which attract tourists from across the globe. The next most important contribution to the economy of Uttarakhand state is the agricultural sector with approximate 5.7 million hectares of cultivated land. Cereals, pulses, oil seeds, sugarcane and onion are the major crops grown here. As 78% of the population depends on agriculture, it also contributes considerable revenue to the state s economy. Another important component on which the economy of Uttarakhand depends is its mineral resources. The state has large resources of minerals such as limestone, rock phosphate, dolomite, magnesite, copper, graphite, soap stone, gypsum and many others. Many of these minerals are exported out of India that fetches good revenue. Uttarakhand economy also depends upon its small scale industries. The state has all total 28249 small scale units and 397 cottage (gramodhyog) units. This state also has 191 heavy industries that are earning a profit of `26946.6 million. Another component that is spreading its wings in Uttarakhand is the real estate. With more and more real estate agents flowing into this state, it will be one of the major forces in determining the flow of economy of Uttarakhand. However, the tourism sector, especially the spiritual tourism, shall remain one of the major revenue earning sectors in the state. 6.2 ECONOMIC IMPACT OF SPIRITUAL TOURISM IN UTTARAKHAND Uttarakhand was carved out of Uttar Pradesh and given an independent status as the tenth Himalayan state of the Indian Union on 9 th November, 2000. Tourism has been playing a major role in building and sustaining the economy of this nascent state. Tourism has been a major driver of economic growth and livelihood promotion in most of the remote areas of Uttarakhand. The income earned from tourists by providing various services including transportation, food and beverage, pony and porter services, etc. sustain 150
the livelihood of several villages in the remote hilly regions of the state. An interesting fact about tourism in Uttarakhand is that the number of tourists to the state, both domestic and international, has been increasing. However, the rate of growth is marginal. A comparative profile of tourists visiting India and Uttarakhand in the first six years of the present decade has been presented in Table 6.1. Interesting information available with Uttarakhand Tourism Development Board is that about 58.2% of the international tourists s visits were for holiday/ sightseeing, 21.9% for health/yoga, and about 19.4% for pilgrimage/ religious functions as shown in Figure 6.3 (UTDB, 2011). For domestic tourists, on the other hand, the main purpose of 44.2% of the tourist visit was pilgrimage/religious while that of 43.6% was holiday / sightseeing. Spiritual beliefs of common Indian people contribute to this observed higher ratio of domestic spiritual tourists. A profile of the international and domestic tourists visiting the state during the year 2007 is presented in Figure 6.4. It is important to note that during the year 2007, approximately 21% of the total international tourists visiting the state were spiritual tourists against a significantly low 2% of the domestic tourists as illustrated in the Figure 6.4. The profiles of the tourists visiting the two most important spiritual tourist places in the state Haridwar and Rishikesh during the years 2006 2010 and 2000 2010 have been presented in the Tables 6.2 and 6.3 respectively. It is clear from the Tables that there have been increasing trends in the number of tourists to the state, both in total and spiritual. Significantly, there has been a big jump in the inflow of tourists to Rishikesh during the year 2010 with respect to the corresponding number in the year 2009; whereas there were fluctuations in the total numbers in the preceding nine years. Haridwar, on the other hand, records an almost steady growth in the total number of tourists visiting the place. Thus, if the number of spiritual tourist can be enhanced through various motivational/promotional programmes, the revenue earned by the state can be significant. 151
Table 6.1 Tourist profile in Uttarakhand during 2001 2006 (Mittal et al., 2008) Year Number of tourists (in millions) Domestic International Total 2001 9.55 0.04 9.60 2002 10.61 0.05 10.65 2003 10.84 0.06 10.89 2004 11.72 0.06 11.78 2005 14.22 0.08 14.29 2006 19.36 0.10 19.45 Figure 6.3. Segmentation of tourists according to the motivation of visit (Data source: Government of India, 2008). Table 6.2 Profile of tourists visiting Haridwar during 2006 2010 (Data source: UTDB, 2011) Year Domestic International Total 2006 98,00,770 11,774 98,12,544 2007 1,12,04,275 15,609 1,12,19,884 2008 1,13,56,250 17,854 1,13,74,104 2009 1,20,49,450 19,967 1,20,69,417 2010 1,88,37,125 29,555 1,88,66,680 152
Table 6.3 Total Number of tourists visiting Rishikesh during the years 2000 2010 (Data source: UTDB, 2011). Year Domestic International Total 2000 230,857 6,414 2,37,271 2001 224,792 6,536 2,31,328 2002 268,882 4,573 2,73,455 2003 220,097 6,047 2,26,144 2004 323,734 5,918 3,29,652 2005 369,573 5,538 3,75,111 2006 329,392 5,912 3,35,304 2007 558,062 5,109 5,63,171 2008 551,495 5,052 5,56,547 2009 581,869 4,550 5,86,419 2010 1,093,164 5,548 10,98,712 2% of Total 21% of Total Figure 6.4 Share of spiritual tourists in Uttarakhand in the year 2007 (Data source: Government of India, 2008). 153
6.2.1 State s Earnings In order to estimate the incoming money to the state due to the spiritual tourists, an attempt was made to obtain information about their expenditures through Question No. 25 of the Annexure I. The corresponding data are presented in the Figure 6.5. It is seen from the Figure that approximately 50% and 35% of the international and domestic tourists respectively spend more than five thousand rupees in a spiritual place in a single day. These figures can be very well linked to the states earnings through various means. Further, consequent to this earning, the collected data (Question No. 4, Annexure III) reveal that the travel agents in the two places (Haridwar and Rishikesh) earn significantly as illustrated in Figure 6.6. Similar incomes are also earned by other related entities like travel guides, hoteliers, small vendors, and other service providers etc. which can be basically included in the total expenditures of a tourist. Further, a fraction of these spiritual tourists might add few sightseeing or other non-spiritual activities through which the state s exchequer gets richer every day. ` Figure 6.5 Approximate total expenditures of the tourists at a single spiritual place. 154
Figure 6.6 Approximate monthly income of travel agents. A forecast of the domestic as well as international tourists visiting the state has been published by the Uttarakhand Tourism Development Master Plan 2007 2022 (Government of India, 2008). According to this report, the domestic tourist visits in Uttarakhand by 2012, 2017 and 2022 are projected to be 42.24 million, 77.82 million and 143.38 million respectively; while the projected foreign tourist visits are estimated at 0.227 million, 0.399 million and 0.703 million respectively. Thus, in case these targets get realized, the corresponding income generation at 2004 05 prices is likely to be as presented in Figure 6.7. The projected income has been arrived at by considering individual spending of international and domestic tourists at `2348.00 and `1119.00 per day for a stay of four and two days, respectively. 6.2.2 Employment through Spiritual Tourism One of the major benefits of growth of tourism is the generation of direct and indirect employment. Employment generation in a state, which has very little to boast about regarding the growth of small and heavy industries, has certainly a decisive impact on its economy. 155
` ` State s Earnings (`) Tourists Figure 6.7 State s earnings from spiritual tourists in the year 2007 (Data source : Government of India, 2008). The type of employment generated owing to the spiritual tourism can broadly be categorized into organised and unorganised sectors depending on their mode of functioning. The categorization is schematically presented in the Figure 6.8. The state has a number of state supported tourism agencies apart from a separate Government Department for formulation and implementation of policies. Hospitality in all the important spiritual places is also provided by many hotels and guest houses run by Government, Non Government Organisations (NGOs) and private entrepreneurs. Many chain of hotels have made their existence in the spiritually strategic locations. All such establishments basically employ the local people contributing towards minimizing the state s unemployment problem. Number of tourist operators chain-linking the various spiritual places as well as providing a large pool of man power is working in an unorganised manner in almost all the spiritual places of the state. These include local conveyances providers through autorickshaw, rickshaw, horses, donkeys, persons engaged in various spiritual activities, persons who run very small tea/refreshment shops (Chaiwallas), vendors who sells various 156
materials for spiritual activities, tourist guides and in other indirect services like laundries, hair styling etc. Thus, there are number of employment opportunities growing in and around the spiritual activity centers whose earnings solely depend on the spiritual tourists. Figure 6.8 Direct and indirect employment through spiritual tourism. 6.3 Causal-Loop Approach to Tourist-Infrastructure-Economy The importance of tourism for an economy is independent of its status of development. Tourism plays a major role in shaping the economies of many advanced countries including the United States of America and Spain. It is not only the state s income that makes tourism sectors important, rather the sectors like foreign investment, subsidies, employment and taxation also get highly affected. Infrastructure and resources are considered the most important features for any country. In developing and advanced countries, tourism is viewed as an important means to enhance income and employment. There have been considerable researches on tourism and relationships with economic development. It has been established in the works of various authors (Mishra et al., 2011; Vijayanand, 2012) that there has been a reasonable correlation between the infrastructure, tourism and the economy of the state/country. Consequently, most of the countries that thrive on the tourism industry put emphasis on their infrastructure development in order to 157
strengthen their economy through enhanced tourism activities. A tourism-infrastructureeconomy model has already been presented in the Chapter 5 of the current report (Figure 5.4, Section 5.3.1). Subsequently, a causal-loop model showing the interrelationships of different major elements involved is discussed in the following section. 6.3.1 The Causal-Loop Model A generalized causal-loop relationship of the features like number of tourists, state s economy, infrastructure and employment has been illustrated in the Figure 6.9. The number of spiritual tourists in the state increases with an increase in total number of tourists in the state through whom the state earns revenue. On the other hand, as the state s economy flourishes, the state would be tempted to improve upon the sources of their revenue earning from the spiritual places. Better economy would also provide the state with the opportunity to develop its infrastructure. Improved condition of the spiritual centers and the state-of-the-art infrastructure naturally attract more tourists to the state making it a positive loop. As a consequence of the increase in the number of tourists to a state, a higher demand in the services sector is automatically generated. This includes hospitality, communication, health care, and specialized services in the spiritual centers. The type of specialized services shall vary according to the nature/characteristics of the center including need for local guides, spiritual activists, barbers, local conveyances etc. A rising demand in small services segments, on the other hand, creates employment opportunities basically for the local residents, which in turn, contributes positively to the state s economy. A corresponding model of tourist-infrastructure-economy has also been developed using system dynamics approach as illustrated in Figure 6.10. The model clearly depicts the factors and their relationships influencing the three major entities. 158
Spiritual Tourists Revenue Number of Tourists Demand in Services Condition of Spiritual Places Unemployment State s Economy State s Infrastructure Figure 6.9 A causal-loop presentation of the Tourist-Infrastructure-Economy. Revenue Economy multiplier Spiritual tourist Tourist multiplier State Economy Tourist Economy increases Economy decreases Tourist decrease Tourist increases Economy infrastructure factor ~ ~ Infra tourist factor Infrastructure Decreasing Increasing Figure 6.10 A system dynamics approach to the Tourist-Infrastructure-Economy model. 159
6.5 SUMMARY Growth of tourism industry has been a major contributor to the increased economic activities throughout the world. It has earned revenue for the country, created jobs, improved infrastructural facilities in places which otherwise has no potential for rapid development, and enhanced socio-cultural interactions by many fold. As mentioned already, Uttarakhand, one of the hilly states of India that takes the pride being termed as the Queen of Hills. The state is also considered as the base of spiritual places. Thus, ideally there should not be a reduction in the size of tourists visiting the state given the improving infrastructure of the state. The future prospects of spiritual tourism in the state have also been partially studied. The status of tourism and, spiritual tourism, in particular, in the Indian state of Uttarakhand have been analysed with the help of primary and secondary data. The possibility of the revenue to be earned by the state from spiritual tourists has been explored. A causal-loop representation of the effect of spiritual tourists on the state s economy has been developed. It is found that tourism is one the highest revenue earning industries in Uttarakhand. There has been an increase in the rate of tourist inflow to the state, particularly in the current decade and a considerable part of these tourists are spiritual tourists who play an important role in the state s economic health. Earning through tourists and employment (both direct and indirect) are two important indicators which influence the state s economy significantly. Further, it has been found that the international spiritual tourists contribute more towards the state s revenue than the domestic tourists. In order to enhance the inflow of spiritual tourists to the state, the conditions of the spiritual places, and the state s infrastructure should be improved. 160