Impact of Tourism Sector on Economic Growth of India: Empirical Evidence from India

Abstract

Tourism sector is considered as an engine of economic growth of the countries worldwide.  India with its rich cultural and historical heritage and places with natural beauty has vast potentiality in tourism industry. Tourism sector becomes an important service sector in India as it generates employment opportunities, promotes foreign exchange earnings(FEE) from tourism, upgrades the standards of livings of the people and leads to the overall economic growth in the country.Thus this paper examines the impact of tourism ( FEE from tourism) on economic growth( GDP per capita) for the time period 1997 to 2019. In this study to examine the relationship between these two variables that is FEE from tourism and GDP per capita, ADF( Augmented Dicky Fullar) unit root test,PP( Phillips Perron Unit root test and OLS( Ordinary Least Square) model are applied. The result of the study shows that there is a positive relationship between FEE from tourism and GDP per capita. That is as FEE from tourism increases the GDP per capita will also increase and vice versa. But from the result of the OLS estimation it is seen that the relationship between the FEE from tourism and GDP per capita is not strong. That means the impact of the growth of tourism sector  on the economic growth of India is weak.