Investigating the Credible Linkages Between Tourism and Economic Growth Across Different States in India Using Panel Data Approach

Abstract

Tourism has catalyzed India's economic growth by creating jobs, boosting businesses, export revenues, government earnings, and overall infrastructure development. The objective of this paper is thus to find out the long-run relationship and causal nexus between tourism and the economic growth of different states in India for the last two decades. The impact of government expenditure on tourism, along with domestic and international tourist visits, has been analyzed concerning the economic growth of different states in India. The PMG ARDL modelling approach with error correction terms and heterogenous Dumitrescu and Hurlin(D-H) based causality techniques have been employed. The tourism-led growth hypothesis, which emphasizes focus on inbound tourism as a long-term factor affecting economic growth, proves invalid in the Indian context at the state level. However, the government-allocated tourism expenditure and domestic tourist visits within the country proved significant in establishing the long-run nexus between tourism and economic growth.