Financial Daily from THE HINDU group of publications
Thursday, Dec 12, 2002
Industry & Economy
Earmark more funds for tourism: WTTC
THIRUVANANTHAPURAM, Dec. 11
THE World Travel and Tourism Council (WTTC), a global forum for business leaders in travel and tourism, which has rated Kerala as the second-fastest growing tourism destination in the world, has strongly urged the State Government to progressively increase the share of tourism in the State Budget to reach five per cent of the total Plan allocation over the next five years.
This is one of a series of policy recommendations made by the global tours and travel body following its assessment of the tourism scenario in the State through a Tourism Satellite Accounting (TSA) exercise.
These policy changes are necessary if Kerala is to derive optimal benefits from its tourism potential.
"The starting point is obviously the very low financial investment by the Government in the tourism sector. A one per cent share of the Budget is certainly not enough to propel the State fast enough into the mainstream of global tourism," the TSA said.
Based on statistics relating to State Plan allocation and Central assistance to the State, it becomes clear that while in percentage terms there has been a substantial increase in the availability of funds, allocations for tourism have been stagnant as compared to their share in the overall Budget.
WTTC is also concerned that the levels of taxation by the Sate Government on hotels, liquor and food and beverages, is among the highest among all States in India.
"It needs to be recognised that air-conditioned rooms or imported liquor are not luxury for foreign tourists but items of necessity, which they are used to in their own countries and elsewhere," WTTC said.
"It also needs to be recognised that lowering of tax rates can actually result in increased revenue collection due to increased demand and lower taxation."
Access to the State is the biggest single hurdle in the way of rapid increase in tourism.
Bilateral air service agreements limit international flights to Thiruvananthapuram and Kochi.
At these airports, foreign airlines are restricted to seats as determined by the national carriers.
For example, the Cochin International Airport has been in operation for four years now, but operations at the airport are severely limited to a handful of foreign carriers.
Kerala has a fragile ecosystem and its backwaters and coastal lagoons are susceptible to pollution and overcrowding.
The State needs to conduct carrying capacity studies for it to be able to preserve its precious tourist attractions.
The vast increase in the manpower requirements of the tourism industry will necessitate the creation of suitable training facilities which could equip the workforce with the skills required to handle sophisticated foreign visitors.
Special attention should be paid to placing education and training at the forefront of travel and tourism development, introducing it into the school curriculum and having mid-career refresher courses to constantly upgrade skills, WWTC said.
Setting new benchmarks
THIRUVANANTHAPURAM, Dec. 11
Kerala was the first Indian State to be accorded the status of Partner State of the World Travel and Tourism Council (WTTC) in 2000.
In the words of Mr Jean-Claude Baumgarten, President, WTTC, this has been done in the firm recognition of Kerala's tremendous potential in the sector.
The partnership was designed to initiate and strengthen a cohesive set of strategic policies to champion the interest of India's strongest economic growth sector and creator of employment, he added.
In June 2001, WTTC and Kerala initiated a dialogue to conduct a Tourism Satellite Accounting (TSA) research in the State.
The TSA is now the accepted measure of the economic impact of tourism in a defined area.
It follows a comprehensive simulation of the new international standard adopted by the UN as agreed at the Enzo Paci World Conference on the Economic Impact of Tourism in June 1999.
Following in the footsteps of two US States, Hawaii and South Carolina, Kerala has now joined the exclusive club of sub-national economies that have implemented TSA.
This is creditable considering that most of developed economies have not yet incorporated the system, the WTTC said.
The Kerala TSA was developed using proprietary econometric models pioneered by WTTC in association with the Oxford Forecasting Group (OEF), to translate national microeconomics into fully independent regional travel and tourism economics.
Over the next 10-year period, WTTC forecasts that Kerala will nearly triple its current level of employment in the sector from 6.93 lakh to two million in 2012.
On relative spending by Governments in the sector, it said that India's $25.4 million (Rs 127 crore) was abysmally low amounting to one per cent of the total spending.
At current rates, this is expected to grow no more than to 1.1 per cent over the next 10 years, reflecting the apathetic attitude of the Government towards investing in travel and tourism.
Spending levels by other countries in the region are revealing enough - China (3.8 per cent), Spain (9.5 per cent), Singapore (9.1 per cent), Hong Kong (7.4 per cent), Malaysia (5.1 per cent), France (9.4 per cent) and Sri Lanka (four per cent).
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