MANAGERIAL COMMUNICATION

AND SKILL DEVELOPMENT (MCSD)

Affects of Covid-19 on employment in
Tourism of India

Department OF Business Administration (HR)

The University of Burdwan
BUR/MBA(HR)/2020/ 015
2020-202
 Acknowledgement

I have taken effort in this project. However, it would not have been possible
without the kind support and help of many individuals and organizations. I would
like to extend my sincere thanks to Pradyumna Tripathy for their guidance and
constant supervision as well as for providing necessary information regarding the
project and for their support in completing this project.
I would like to express my gratitude towards my parents and members of (BU) for
their kind cooperation and encouragement which help me in the completion of this
project.
Content
Topic Pg. NO

Introduction 5

Sectoral or inter-state Impact 6-7

Impact on National Income 7-9

Employment Impact 9-10

Inflation and impact on market size 10

Government Initiatives 11-12

Introduction
By June 2020, COVID-19 infected over 10 million people and caused the deaths of over
500,000 worldwide (WHO1). Globally, the spread shows no sign of abating. Although daily
cases in Europe and Western Pacific are declining, they are increasing in the Americas, South
East Asia and Africa. In response, most countries have closed their borders to visitors and
tourists. The UN World Tourism Organization2 reported during the second quarter of 2020 for
the first time ever that 100 per cent of global destinations introduced travel restrictions. As a
result, international tourism has been almost totally suspended, and domestic tourism curtailed
by lockdown conditions imposed in many countries. Although some destinations have started
slowly to open up, many are afraid of international travel or cannot afford it due to the economic
crisis. Tourism is a critical sector of the international economy. In 2019, the tourism sector
accounted for 29 per cent of the world’s services exports and about 300 million jobs globally.3 It
is an important source of income and employment for developed and developing countries. The
global contraction in tourism arrivals could have devastating economic consequences as some
developing countries are highly dependent on tourism. In some countries, such as several small
island developing states (SIDS), tourism accounts for more than half of the GDP.
This paper focuses on the potential economic effects of the halt of tourism, in the short and
medium term, in the major tourist destinations as well as in those countries highly dependent on
tourism (as a share of GDP). In this context, special attention is placed on developing countries
where the prosperity of some communities can be seriously compromised by the fall of tourism
revenues. The paper considers three different scenarios to quantify the impact of the reduction in
global tourism on country incomes, trade and employment using a general equilibrium model
which captures the backward and forward linkages between sectors. The paper concludes with
policy implications.
 1. Sectoral or Interstate Impact
Turning to the sectoral impacts of the COVID-19 pandemic, the computable general equilibrium
(CGE) model GTAP covers the global economy and links all sectors through input-output tables
and production functions. The advantage of CGE models is that it allows analysis on
intersectoral linkages and takes limitations of the availability of primary factors, capital, land,
labour and natural resources, into account. Tourism employs labour, capital, and a host of
intermediate inputs. The major endowments are capital and labour. Capital comprises hotels,
ports and airports, rental cars, and specific tourist facilities. The capital used in tourism is to a
large extent immobile, i.e. it can hardly be used in other sectors. Labour, however, may be more
mobile, depending on the specificity of the required skills. The main intermediates that are used
in tourism are services, including health, financial, construction, trade, air transport and
communication. Intermediate goods include food and alcohol, motor vehicles and plant-based
fibres. The intermediate goods are used in other sectors as well.
Intersectoral linkages worsen the impact of a decline in tourism. A fall in tourist arrivals has a
negative impact on the suppliers to hotels, food and recreational activities.
Results are qualitatively similar but with higher magnitudes in the Intermediate and Dramatic
scenarios. However, it is important to note that some sectors such as construction, metals,
minerals, machineries, electrical equipment, electronic products, rubber and plastic products,
may experience gains in some countries, as labour and capital are reallocated away from tourism
for use in other productive sectors and away from tourism. The negatively affected sectors lose
due to their complementarities with the tourism sector, as well as the sheer magnitude of the
shock. This may be especially applicable to countries that are most dependent on tourism.
The indirect losses due intersectoral linkages in the tourism industry produce a multiplier effect
throughout the economy. Findings show that the losses in GDP are approximately 2-3 times
higher.
Figure 1: Represent Sectoral impact

2. Impact on National Income

India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism
products - cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and
religious tourism. India has been recognized as a destination for spiritual tourism for domestic
and international tourists. In his Independence speech from Red Fort, Prime Minister Mr.
Narendra Modi urged people to visit 15 domestic tourist destinations in India by 2022 to promote
tourism. India ranked 34 in the Travel & Tourism Competitiveness Report 2019 published by the
World Economic Forum.

In WTTC’s Economic Impact 2019 report, India’s Travel & Tourism GDP contribution grew by
4.9%, which was the third highest after China and Philippines. Additionally, the report also
highlights that between 2014-2019, India witnessed the strongest growth in the number of jobs
created (6.36 million), followed by China (5.47 million) and the Philippines (2.53 million).

Total contribution by travel and tourism sector to India’s GDP is expected to increase from Rs.
15.24 lakh crore (US$ 234.03 billion) in 2017 to Rs. 32.05 lakh crore (US$ 492.21 billion) in
2028. Total earning from the sector in India is targeted to reach US$ 50 billion by 2022.

In FY20, 39 million jobs were created in the tourism sector in India; this accounted for 8.0% of
the total employment in the country. International Tourists arrival is expected to reach 30.5
billion by 2028. e-Visa facility was offered to 169 countries as of December 2019.

During 2019, foreign tourist arrivals (FTAs) in India stood at 10.89 million, achieving a growth
rate of 3.20% y-o-y. During 2019, FEEs from tourism increased 4.8% y-o-y to Rs. 1,94,881 crore
(US$ 29.96 billion). In 2019, arrivals through e-Tourist Visa increased by 23.6% y-o-y to 2.9
million.

Under the Swadesh Darshan scheme, 77 projects have been sanctioned of worth Rs. 6,035.70
crore (US$ 863.60 million). In Union Budget 2020-21, the Government has allotted Rs. 1,200
crore (US$ 171.70 million) for the development of tourist circuits under Swadesh Darshan for
Northeast.

The launch of several branding and marketing initiatives by the Government of India such as
‘Incredible India!’ and ‘Athiti Devo Bhava’ has provided a focused impetus to growth. The
Indian Government has also released a fresh category of visa - the medical visa or M-visa, to
encourage medical tourism in the country. The Government is working to achieve 1% share in
world's international tourist arrivals by 2020 and 2% share by 2025.

Amid the relaxation provided by the government after the covid lockdown, the Indian
Association of Tour Operators (IATO) has urged the government to finalise a roadmap for
resumption of international flights and facilitate e-visas and tourist visas.
Subsequently in November end, India introduced a graded relaxation of its visa and travel
restrictions for more categories of foreign nationals and Indian nationals.

Post the pandemic crisis, the government plans to tap into regional tourism by opening doors for
South Asian country tourists.

The Government is also making serious efforts to boost investment in the tourism sector. In the
hotel and tourism sector, 100% FDI (Foreign Direct Investment) is allowed through the
automatic route. A five-year tax holiday has been offered for 2-, 3- and 4-star category hotels
located around UNESCO World Heritage sites (except Delhi and Mumbai).

The Government of India also announced to develop 17 iconic tourist sites in India into world-
class destinations as per Union Budget 2019-20. Ministry of Tourism launched DekhoApnaDesh
webinar in April 2020 to provide information on the many destinations and the sheer depth and
expanse of the culture and heritage of Incredible India. Till August 17, 2020, 48 webinars were
conducted under the series.

The Ministry of Tourism developed an initiative called SAATHI (System for Assessment,
Awareness & Training for Hospitality Industry) by partnering with the Quality Council of India
(QCI) in October 2020. The initiative will effectively implement guidelines/SOPs issued with
reference to COVID-19 for safe operations of hotels, restaurants, B&Bs and other units.
 3. Employment impacts

The pandemic is characterized by an almost unprecedented increase in unemployment, disguised

somewhat by government support measures in some countries. For this reason, the labour market
is modelled assuming fixed wages for unskilled workers with all the adjustment occurring in the
quantity of labour employed. For skilled workers, it is assumed that the adjustment occurs in
wage rates, the standard closure.
Further, there is a net loss to the economy due to unemployed labour and capital. Due to the
dramatic contraction in the tourism industry, many workers may become unemployed or
displaced. Displaced workers can move to other sectors within countries, but it may be difficult
to find employment in other sectors or industries during the economic downturn. Employment
can increase in sectors not closely linked to tourism, absorbing some of the displaced workers
from the tourism industry.
In many developing and least-developed countries tourism provides an opportunity to enter the
job market, though often with precarious working conditions. Tourism often serves as a first
entry point into work especially for women, youth, migrant workers and rural population (ILO,
2013).
A majority of tourism workers are under 35 years (ILO, 2017). A report by the UNWTO (2019)
states that “Women’s work in tourism is dominated by informality, through high staff turnover,
long working hours, subcontracting, flexible working conditions, the prevalence of casual
workers and seasonal variations in employment”. Low-skilled, casual and temporary workers are
likely to be the first to lose their jobs and may find it difficulty in seeking employment in other
sectors of the economy.
unskilled women, as well as youth, are disproportionately affected by lay-offs in the tourism
sector resulting from the COVID-19 crisis.14 Negative employment and wage effects are highest
in countries reliant on tourism. Due to the possible mobility of labour, wage effects can spread
across the economies. The changes in real wage rates for skilled staff is shown in figure 6. The
steepest drops are in Thailand (-12 per cent), Jamaica (-11 per cent), and Croatia (-9 per cent), in
the optimistic case, and two to three times this in the worst case. For unskilled workers, the
resulting level of unemployment is seen in figure 7. Once again, the worst affected countries are
Thailand, Jamaica and Croatia. In the most extreme case employment falls 44 per cent in
Jamaica if the entire tourism sector is stopped for 12 months. The case in Jamaica is extreme due
to a high share of unskilled workers in its tourism industry, and the contribution of the industry
to GDP. The high unemployment contributes to the significant losses in GDP. It can be expected
that other SIDS reliant on tourism may face similar dramatic challenges in the labour market.

4. Inflation and Impact on Market Size

India is the most digitally advanced traveler nation in terms of digital tools being used for
planning, booking, and experiencing a journey. India’s rising middle class and increasing
disposable income has supported the growth of domestic and outbound tourism. During 2019,
foreign tourist arrivals (FTAs) in India stood at 10.89 million, achieving a growth rate of 3.20%
y-o-y. During 2019, FEEs from tourism increased 4.8% y-o-y to Rs. 1,94,881 crore (US$ 29.96
billion). In 2019, arrivals through e-Tourist Visa increased by 23.6% y-o-y to 2.9 million.
International hotel chains are increasing their presence in the country, and it will account for
around 47% share in the tourism and hospitality sector of India by 2020 and 50% by 2022.

5. Government Initiatives

The Indian Government has realised the country’s potential in the tourism industry and has taken
several steps to make India a global tourism hub.

Some of the major initiatives planned by the Government of India to boost the tourism and
hospitality sector of India are as follows:

 On November 4, 2020, the Union Minister of State (I/C) for Tourism & Culture, Mr.
Prahlad Singh Patel inaugurated the “Tourist Facilitation Centre” facility constructed
under the project “Development of Guruvayur, Kerala” (under the PRASHAD Scheme of
the Ministry of Tourism).
 The Ministry of Tourism’s ‘DekhoApnaDesh’ webinar series titled ‘12 Months of
Adventure Travel’ on November 28, 2020, is likely to promote India as an adventure
tourism destination.
 In October 2020, Prime Minister Mr. Narendra Modi inaugurated four new tourist
attractions in Gujarat namely, Arogya Van, Ekta Mall, Children's Nutrition Park and
Sardar Patel Zoological Park/ Jungle Safari, near the Statue of Unity at Kevadiya in
Narmada district.
 The initiative is a part of 17 new projects that are planned. Additionally, the government
will also launch seaplane service from Ahmedabad to Statue of Unity in a major push to
India’s tourism.
 The Ministry of Tourism developed an initiative called SAATHI (System for
Assessment, Awareness & Training for Hospitality Industry) by partnering with the
Quality Council of India (QCI) in October 2020. The initiative will effectively implement
guidelines/SOPs issued with reference to COVID-19 for safe operations of hotels,
restaurants, B&Bs and other units.
 Ministry of Tourism launched Dekho Apna Desh webinar series to provide information
on many destinations and sheer depth and expanse on the culture and heritage of India. 
 Ministry of Tourism launched Audio Guide facility App called Audio Odigos for 12 sites
in India (including iconic sites).
 Prime Minister, Mr. Narendra Modi urged people to visit 15 domestic tourist destinations
in
India by 2022.
 Statue of Sardar Vallabhbhai Patel, also known as ‘Statue of Unity’, was inaugurated in
October 2018. It is the highest standing statue in the world at a height of 182 metre. It is
expected to boost the tourism sector in the country and put it on the world tourism map.
 Government of India is working to achieve one% share in world's international tourist
arrivals by 2020 and 2% share by 2025.
 Under Budget 2020-21, the Government of India has allotted Rs. 1,200 crore (US$
171.70 million) for development of tourist circuits under Swadesh Darshan for eight
Northeast states.
 Under Budget 2020-21, the Government of India has allotted Rs. 207.55 crore (US$
29.70 million) for development of tourist circuits under PRASHAD scheme.
 In 2019, Government reduced GST on hotel rooms with tariffs of Rs. 1,001 (US$ 14.32)
to Rs. 7,500 (US$ 107.31) per night to 12% and those above Rs. 7,501 (US$ 107.32) to
18% to increase India’s competitiveness as a tourism destination.
Conclusion:
Staycation is seen as an emerging trend were people stay at luxurious hotels to revive themselves of
stress in a peaceful getaway. To cater to such needs, major hotel chains such as Marriott International,
IHG Hotels & Resorts and Oberoi hotels are introducing staycation offers were guests can choose from a
host of curated experiences, within the hotel.

India’s travel and tourism industry has huge growth potential. The industry is also looking forward to the
expansion of e-Visa scheme, which is expected to double the tourist inflow in India. India's travel and
tourism industry has the potential to expand by 2.5% on the back of higher budgetary allocation and low-
cost healthcare facility according to a joint study conducted by Assocham and Yes Bank.