What Deters India to Emerge As a Major Hotspot Of Foreign Tourist Arrivals: an Empirical Inquiry From a Determinant Perspective

Abstract

This study investigates the major factors influencing foreign tourist arrivals (FTAs) in India by incorporating the impacts of structural changes in policies. This is very much relevant in policy making since it portrays which determinants attract and dissuade FTAs. By implementing ARDL to cointegration technique on the annual data from 1985 to 2020, it uncovers the long-run relationship between FTAs and its determinants. The estimates obtained from ARDL model interestingly reveal that in the long-run, real GDP of destination, real per capita GDP of source, terrorism incidents in source, and air transport connectivity of the destination with major source countries are the crucial determinants that encourage FTAs. In contrast, real exchange rate (RER) of Indian Rupee per US dollar, terrorist incidents, and cognizable crimes in the destination are observed to have strong negative impacts and are dissuading FTAs into India. Further, an application of dynamic ordinary least square (DOLS) and canonical cointegration regression (CCR) techniques validated the estimates, ensuring robustness of our findings. This knowledge helps the policy making in recommending more investment on factors of attraction and dampening the effect of dissuading factors. Identifying a country's strength and weaknesses in tourism helps in a long way to ameliorate FTAs and foreign exchange earnings (FEE).