Demonetisation: Tourism is down in Kerala and Goa

On November 24, 2016, I had written that the real question related do demonetization is what happens after the lines end at the banks and ATMs. I had posed these questions as commonsense ways to judge whether the economy is slowing down.

1.      What happens to demand for luxury goods after Dec 15?

2.      Will there be fewer Indian tourists in Rajasthan, Goa and Kerala? Or, even if the numbers are the same, will they spend less money?

3.      What will happen to expenditures for weddings?

4.      What will happen to purchases of expensive saris and jewelry?

5.      What will happen to purchases of expensive cars?

6.      Does construction of new homes and office buildings stall or slow down?

7.      Does informal credit (from moneylenders, not banks) in cities and villages become much less available and much more expensive?

8.      Have the salary offers to fresh MBA and engineering graduates come down?

9.      Does the output of agricultural products come down?

Now (December 29, 2016), we have some answers to Question 2.

Kerala

The Financial Express reported

Kerala chief minister P Vijayan had tweeted that demonetisation has hit the tourism sector hard with a drop of 8.7% in international and 17.7% in domestic tourists reported so far. Data from the Kerala tourism department shows that foreign tourist arrival to Kerala during the year 2015 was 9,77,479, an increase of 5.86% over the previous year’s figure of 9,23,366.

In other words, while tourists had increase in past years, this year, their number is down, with the decline more in Indian tourists than in foreign tourists.

NDTV reported

Dr Ram Kumar, Kerala Planning Board Member told NDTV, "Kerala's economy has been particularly vulnerable after notes ban because we rely heavily upon the service sector and the informal or unorganised sector is among the major contributors. Restricted cash flow has had a severe impact."

The Economic Times reported

Terming the Kochi-Muziris Biennale (KMB) a "stellar example" of public private partnership, Kerala Tourism Principal Secretary Dr Venu V said the Biennale had helped the state's tourism sector offset the crisis brought on by demonetisation. 

"When Kerala tourism had a crisis on its hands with the demonetisation policy affecting tourist arrivals, the Biennale has single-handedly created a unique economic zone that supported the tourism sector and brought money into the hands of the common man and local community," he said. 

Goa

The Navhind Times reported

The Christmas and the New Year seasons are here but tourists are not here in as big a number as in the previous years. The cash crunch has kept away a large number of domestic and foreign tourists. There is around 25 per cent decrease in arrivals of domestic tourists.

The Indian Express reported

Goa seems to be reeling under the after effects of demonetisation as the regular week-long beach parties ahead of the New Year celebrations in the coastal state are yet to begin this time. Goa is a sought after destination for these kind of parties on shacks this time of the year and usually witnesses huge rush of domestic and international visitors. However, the revelry this year has hit a low note with fall in tourist arrivals in the state.

The Hindubusinessonline reported

Known for its rumbustious New Year eve parties and seaside frolics, all roads across the country, till last year, used to lead to the various beaches of Goa — Colva in the south to Anjuna in the north — during December.

But for most of December this year, the country’s biggest tourist destination, resembled a ghost town.

Post-demonetisation, Goa seems to have lost its verve, joy, hordes of honeymooners and other tourists. Taxis which used to ferry tourists from one beach to another, criss-crossing the entire State, are finding it difficult to carry out their business.

No one should feel sorry for the potential tourists, who are well-off. The problem is for the people who earn their daily living by serving tourists. These people are unwitting pawns suffering economic hardship. They are not people with lots of black money – or lots of white money. They are just ordinary people who have been hit hard by a policy that as supposed to be aimed at big-time crooks with lots of black money.