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Impact of Covid 19 on Hospitality and Tourism Industry in India

Impact of Covid 19 on Hospitality and Tourism Industry in India


  • GS 3 || Economy || Industries || Major Industries

Why in the news?

Covid-19 has so many impact on so many things there is endless damage caused due to pandemic throughout the world and India has also faced as many loses hospitality and tourism Industry is one of them


  • Tourism and hospitality have grown as a crucial industry for the global economy in recent years, accounting for roughly 10% of global GDP. The Covid -19 pandemic’s tight travel restrictions and movement limitations, however, have harmed the whole tourism and hospitality industry.
  • Due to a range of tourist sectors such as cultural tourism, historical tourism, pilgrimage tourism, educational tourism, medical tourism, environmental tourism, and so on, India has a tremendous tourist potential.
  • However, the Covid-19 Pandemic, as well as lockdowns and limitations on tourist destinations, has had a significant impact on tourism in India.

The impacts of COVID-19 on Tourism and Hospitality are as follows:

  • Economic growth: The tourism industry is a significant part of the service sector, which contributes 9.2% of GDP. The income from the travel and tourist business in India has nearly halved since the shutdown was imposed.
  • Depreciation of foreign currency: India targets international visitors who like visiting various tourist locations. Their arrival results in an infusion of foreign exchange for India, which is utilized to close the trade deficit. A drop in foreign visitors might result in a large current account imbalance
  • Unemployment: The tourism and hospitality business employs a large number of people, including street sellers, travel agencies, and catering establishments. The sudden drop in tourism leads to a rise in unemployment in this industry.
  • Impact on India’s soft diplomacy: India is an important engine of soft diplomacy in the twenty-first century. For example, the Kartarpur corridor connects India and Pakistan. This epidemic has a negative impact on India’s soft diplomacy.
  • Inter-state tourism promotes cooperative federalism, which is being harmed by the epidemic.

Present State of Tourism and Hospitality Industry:

  • Tourism’s Importance: It may be measured in terms of obtaining foreign money, providing jobs (both directly and indirectly, such as for service providers, taxi drivers, and others), developing character, tolerance, and awareness, among other things.
  • Global GDP: Coastal tourism accounts for 10% of global GDP (Gross Domestic Product).
  • India’s contribution: In terms of digital tools used for planning, booking, and experiencing a journey, India is one of the most sophisticated traveler nations.
  • Job Generation: These are one of the most important sectors for the Indian economy, since they are intimately tied to job creation and employment. In 2018, the travel and tourism sector alone contributed for 9.2% of India’s GDP and employed 26.7 million people. The tourism and hospitality industry accounts for 12.75 percent of all jobs in the country (directly or indirectly)..

Impact on India:

  • In the aftermath of new coronavirus worries, India is seeing a 25% to 30% decline in inbound overseas travelers, according to the Ministry of Civil Aviation.
  • In the January-March quarter, foreign tourist arrivals (FTA) were down by roughly 67 percent on an annual basis, while domestic visitors were down by nearly 40 percent.
  • The Covid-19 epidemic has begun to have an influence on the domestic tourist industry.
  • Domestic travel fell by more than 30% this summer compared to previous year, according to travel agencies.
  • The number of domestic travelers has decreased as people only travel for business or emergency reasons.
  • The hotel industry as a whole is feeling the pinch from lower travel. Bookings have dropped by half in India, according to the hospitality industry..
  • Coronavirus disruption might result in an 18-20% decline in countrywide occupancy throughout the sector, as well as a 12-14% decline in average daily rates (ADRs) for the full 2020 year.
  • Large-scale cancellations and a decline in accommodation prices are expected to have an impact on the hotel industry.
  • The National Restaurants Association of India (NRAI) has warned that even a ten percent to twenty percent reduction in employment among its 7.3 million restaurant employees might result in up to 15 lakh job losses throughout the nation.
  • It is anticipated that about 70% of the 5.5 crore (direct and indirect) workers engaged in the tourism and hospitality business (i.e. around 3.8 crore) might lose their jobs as a result of the Coronavirus.

Underlying Challenges & Government Interventions

  • Despite the fact that the hospitality and tourist sector accounts for about 8%-9% of total GDP, the Coronavirus pandemic is projected to have the greatest impact on jobs. Job losses or wage reductions are a major source of anxiety.
  • The Ministry of Tourism is collaborating closely with the tourism industry to address issues such as survival, salary payment during a cash constraint, and so on..
  • The Ministry of Finance is also taking into consideration the present circumstances in order to provide suitable relief measures in a timely way. For example, the ministry recently issued a freeze on term loans, liquidity, and other financial services.
  • However, other concerns, such as how to better supply fixed-term loans, offer liquidity and assistance to the unorganized labor, EPF (Employees’ Provident Fund) and ESI (Employees’ State Insurance) benefits, and so on, require immediate attention.

Steps govt. took to curtail the spread of virus:

  • While the virus scored globally, the government took proactive measures to control its spread in India. It conducted heavy screenings and mandatorily quarantined incoming International travellers and also conclusively suspended all visas, except for diplomats and employment
  • All schools, gyms, malls, clubs, hotels, community halls, etc. were shut
  • curb the growing panic and to distribute viable information, the government provides authentic information on the virus, its spread, preventions, guidelines, helpline numbers, registered cases, death toll
  • Rapid test vaccination testing was one of the most important steps taken by the government.
  • Vaccine tourism was one of most appreciated step taken by the govt. of India, it not only saved the life of many but also made India international aura and diplomatic relations with other countries very strong

Way forward:

  • Tax Breaks: There is a need to offer tax breaks and create a system that does not cost anyone money but helps to stimulate demand.
  • Incentivizing & Subsidies: Efforts should be made to incentivize local and international tourism.
  • Reengineer Business Model: For example, the airline industry’s notion of leaving the center or alternate rows unfilled is a welcome change.


India’s travel and tourist business has enormous development potential, which may be realized through increasing budgetary allocations and offering low-cost healthcare. The globe will be ready to travel again after the virus pandemic has been contained. As a result, we must guarantee that India portrays itself as a safe destination by emphasizing on and depending on the theme of “Dekho Apna Desh” to boost domestic tourism.

Mains oriented question:

What are the impact of Covid-19 pandemic on Hospitality and Tourism Industry in India? Critically analyze. (200 words)