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Tourism, Inflation & more... - Views on News from Equitymaster
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  • Sep 5, 2008

    Tourism, Inflation & more...

    Inflation slips for the second week...
    India's wholesale price based inflation index slipped to 12.34% for the week ended August 23 from 12.40 % in the previous week. The main reason for the decline was the easing of prices for food staples like lentils and vegetables. While economic growth eased to 7.9 % in the first-quarter to June, the weakest pace in three-and-a-half years, a greater priority for the government will be to control prices. High prices cause unpopularity among the poor masses, who are the hardest hit. With national elections due by mid 2009, the policy makers are likely to keep a close watch on inflation. It may be noted that the next monetary policy announcement is scheduled for October 24.

  • Also read - Inflation number last week

    Incredible India...
    The Indian tourism secretary announced that the government intends to attract 10 m foreign tourists by 2010. It may be noted that tourism has great potential for employment and revenue generation opportunities. If the government is able to achieve the target, it will generate 15 m additional jobs and bring receipts of $9 billion in foreign exchange earnings. The secretary also mentioned that arrival of tourists grew at 14.3 % in 2007, while foreign exchange inflow from the sector grew by 24.3 %. In absolute terms, 5.08 m foreign visitors arrived in India and spent US$10.73 bn in 2007. He also mentioned that tourism sector's contribution to India's GDP in 2008 is estimated at 6.36 %, up from 5.83% in 2003. The sector is also likely to generate 10.17% of India's employment in 2008, up from 8.27% in 2003.

    We believe India has inherent potential as a tourist destination. It is high time that we emulated the much smaller countries in our region. They attract several times the number of tourists that visit India on the back of better marketing and infrastructure.

    Talk more, surf less...
    Yes, that is exactly what Indians are doing! Given that more Indians are talking on their mobile phones and that Indians are talking more on their mobile phones, the impact of demographic dividend on the growth of mobile companies remain uncontested. However, the same does not seem to be filtering in when it comes to internet penetration in the country. Infact, the problem is not just with India but the whole of Asia. According to the International Telecommunication Union (ITU), even though Asia is the world's largest broadband market in terms of absolute numbers, it lags way behind the US and Europe in overall penetration, with just 3.6 out of every 100 inhabitants connected to the high-speed Internet.

    The Asia Pacific region has about 1.4 bn mobile phone subscribers, representing 42% of the global market, and it is expected to exceed 50% within the next two years. India and China together have total cell phone subscribers of about 900 m, accounting for a quarter of the world's total. Also, every month, India adds about 9 m new subscribers, which is higher than in China. However, the flipside is that although India is the world's fastest-growing mobile phone market with nearly 300 m subscribers, only 11 m people in the country have access to the Internet. Given that India is striving hard to project itself as a high quality service outsourcing destination to the world, the deeper penetration and wider usage of the internet is inevitable.

  • Also read - Opportunities in infrastructure-IV



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