India Tourism Report Q3 2012

Positive Starts To 2012 For Tourist Arrivals Data released by the Indian Ministry of Tourism in April 2012 showed that tourist arrivals grew strongly in the first quarter of 2012, building on positive growth registered in 2011. Between January and March, visitor arrivals grew by 9.5% year-on-year (y-o-y) to 1.9mn. Growth was particularly strong in March, when arrivals grew by 13.2% y-o-y. Foreign exchange earnings grew by an impressive 42% y-o-y in rupee terms in March, as compared to 6.8% growth over the quarter as a whole.
Such high levels of growth bode well for performance throughout the rest of the year and are particularly positive in the context of mounting global economic uncertainty. With India having therefore performed well during its traditional high season in the early months of the year, we maintain our forecast for tourist arrivals of 6.8mn in 2012, building on 2011’s positive performance.
India Expands Visa On Arrival System Local media reports in early 2012 suggest that the Indian government is considering extending the Visa On Arrival (VOA) system to more countries, in order to bolster the tourism industry. The VOA system was first introduced in January 2010 and then applied only to Finland, Japan, Luxembourg, New Zealand and Singapore. In January 2011 it was extended to Cambodia, Indonesia, Vietnam, Laos, Myanmar and the Philippines. Now, it may be extended to countries such as Thailand, Spain, Germany, Brunei, Malaysia, Brazil, South Africa, Russia, France and Sweden. The current visa application system can be unwieldy and time-consuming, so the Indian government may be seeking to attract more tourists by streamlining procedures.
Ministry Of Tourism Launches 2012-2017 Development Plan In early 2012, Indian President Pratibha Patel launched the country’s 12th five-year tourism development plan, focusing on the 2012-2017 period. During this timeframe, India is targeting average annual tourist arrivals growth of 12%, aiming to create an extra 5mn jobs. A large part of this plan focused on upgrading India’s transport infrastructure. In particular, the government assesses that 30 airports will need to be built or upgraded during the next five years. Between 2012 and 2017, the government has set an investment
target of US$13.1bn, with approximately 60% to be sourced from the private sector. ###### Since Q108, we have described numerically the banking business environment for each of the countries surveyed by BMI. We do this through our Commercial Banking Business Environment Rating (CBBER), a measure that ensures we capture the latest quantitative information available. It also ensures consistency across all countries and between the inputs to the CBBER and the Insurance Business Environment Rating, which is likewise now a feature of our insurance reports. Like the Business Environment Ratings calculated by BMI for all the other industries on which it reports, the CBBER takes into account the limits of potential returns and the risks to the realisation of those returns. It is weighted 70% to the former and 30% to the latter.
The evaluation of the ‘Limits of potential returns’ includes market elements that are specific to the banking industry of the country in question and elements that relate to that country in general. Within the 70% of the CBBER that takes into account the ‘Limits of potential returns’, the market elements have a 60% weighting and the country elements have a 40% weighting. The evaluation of the ‘Risks to realisation of returns’ also includes banking elements and country elements (specifically, BMI’s assessment of long-term country risk). However, within the 30% of the CBBER that take into account the risks, these elements are weighted 40% and 60%, respectively. Further details on how we calculate the CBBER are provided at the end of this report.
In general, though, three aspects need to be borne in mind in interpreting the CBBERs. The first is that the market elements of the ‘Limits of potential returns’ are by far the most heavily weighted of the four elements. They account for 60% of 70% (or 42%) of the overall CBBER. Second, if the market elements are significantly higher than the country elements of the ‘Limits of potential returns’, it usually implies that the banking sector is (very) large and/or developed relative to the general wealth, stability and financial infrastructure in the country. Conversely, if the market elements are significantly lower than the country elements, it usually means that the banking sector is small and/or underdeveloped relative to the general wealth, stability and financial infrastructure in the country. Third, within the ‘Risks to the realisation of returns’ category, the market elements (ie: how regulations affect the development of the sector, how regulations affect competition within it, and Moody’s Investor Services’ ratings for local currency deposits) can be markedly different from BMI’s long-term risk rating.