present tourism minister of india

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Who Is The Present Tourism Minister Of India

Published: December 12, 2023

Modified: December 28, 2023

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Introduction

The tourism industry plays a significant role in the economic growth and development of a country. India, with its rich cultural heritage, diverse landscapes, and historical landmarks, has emerged as one of the world’s most sought-after tourist destinations. To oversee and promote the tourism sector in the country, the role of the Tourism Minister is crucial. The Tourism Minister of India is responsible for formulating policies, implementing initiatives, and promoting India as a preferred tourist destination both domestically as well as internationally.

The tourism sector in India has seen remarkable growth in recent years, contributing significantly to the country’s GDP and employment generation. It has also become an essential source of revenue and foreign exchange earnings. To harness this potential, the Tourism Minister plays a critical role in planning and implementing strategies to attract more tourists, improve infrastructure, and enhance the overall tourism experience.

In this article, we will explore the role and importance of the Tourism Minister in India, highlight the achievements and initiatives of the current Tourism Minister, and discuss the challenges faced by the tourism sector in the country.

Role and Importance of the Tourism Minister in India

The Tourism Minister in India holds a vital position in shaping the tourism industry of the country. The minister is responsible for formulating and implementing policies, strategies, and programs to promote tourism, both domestically and internationally. Let’s take a closer look at the role and importance of the Tourism Minister:

• Promoting India as a tourism destination: The Tourism Minister plays a crucial role in showcasing India’s diverse cultural heritage, historical monuments, scenic landscapes, and vibrant traditions to attract tourists from around the world. By promoting India as a must-visit destination, the minister helps boost tourism revenue and employment opportunities.
• Policy formulation: The minister is responsible for developing and implementing policies related to tourism growth, infrastructure development, sustainable tourism practices, and tourism marketing. These policies provide a framework for the effective management and promotion of tourism in the country.
• Infrastructure development: Another key role of the Tourism Minister is to focus on infrastructure development in tourist destinations. This includes developing and improving transportation networks, accommodations, tourist facilities, and amenities. The minister works closely with relevant government departments and private stakeholders to ensure tourists have a smooth and enjoyable experience in India.
• Promoting domestic tourism: While international tourism is important, the Tourism Minister also plays a significant role in promoting domestic tourism within the country. By encouraging Indians to explore their own country, the minister helps boost local economies, spread tourism benefits to lesser-known destinations, and foster a sense of national pride.
• Collaboration and partnerships: The Tourism Minister collaborates with various stakeholders, including travel associations, tour operators, hoteliers, and other industry players, to foster partnerships and collaborations that drive tourism growth. This involves working closely with state tourism boards, foreign embassies, and international tourism organizations to enhance India’s presence in the global tourism market.

Overall, the Tourism Minister plays a critical role in shaping the tourism sector, driving economic growth, and creating employment opportunities in India. Their efforts in promoting India as a tourist destination and implementing policies for sustainable tourism development contribute to the country’s overall growth and prosperity.

Previous Tourism Ministers in India

Over the years, several esteemed individuals have held the position of Tourism Minister in India. They have played a crucial role in promoting tourism, enhancing infrastructure, and bringing about positive changes in the Indian tourism industry. Let’s take a look at some of the notable previous Tourism Ministers in India:

• Sardar Buta Singh (1980-1982): Sardar Buta Singh was the first dedicated Tourism Minister in India when the Ministry of Tourism was established as an independent entity. During his tenure, Singh focused on promoting India’s cultural heritage and historical sites, as well as developing infrastructure to support tourism growth.
• Shri Jagmohan (1982-1984): Shri Jagmohan is remembered for his efforts in promoting heritage tourism and conservation of historical monuments. He initiated the “Save the Monuments” campaign, emphasizing the need for preserving India’s rich architectural heritage.
• Shri P.V. Narasimha Rao (1984-1985): While serving as the External Affairs Minister, P.V. Narasimha Rao took charge of the Tourism Ministry for a brief period. He initiated steps to simplify visa procedures, making it easier for foreign tourists to visit India.
• Shri Mani Shankar Aiyar (2004-2009): Mani Shankar Aiyar introduced several innovative initiatives during his tenure as the Tourism Minister. He emphasized rural tourism, community participation, and sustainable tourism practices. Aiyar also focused on promoting India as a health and wellness tourism destination.
• Shri Subodh Kant Sahai (2009-2011): Under the leadership of Subodh Kant Sahai, efforts were made to improve infrastructure, connectivity, and tourism services across the country. His tenure witnessed the formulation of a National Tourism Policy and the launch of various campaigns to promote domestic and international tourism.
• Shri K.J. Alphons (2017-2019): K.J. Alphons, a former bureaucrat, brought in significant changes during his tenure as the Tourism Minister. He focused on promoting India as a preferred tourist destination, enhancing digital initiatives for tourism promotion, and driving initiatives for sustainable tourism development.

These are just a few examples of the notable individuals who have served as Tourism Ministers in the past. Each of them has contributed in their unique way to the growth and development of the Indian tourism industry, leaving behind a lasting impact.

Current Tourism Minister of India

The current Tourism Minister of India is Shri G. Kishan Reddy. He assumed office on July 7, 2021, as a part of Prime Minister Narendra Modi’s cabinet reshuffle. Prior to his role as the Tourism Minister, Shri G. Kishan Reddy served as the Minister of State for Home Affairs. Let’s take a closer look at the profile and background of the present Tourism Minister:

Shri G. Kishan Reddy is a prominent leader from the Bharatiya Janata Party (BJP) and a Member of Parliament from Secunderabad constituency in Telangana. He has a strong political career and a background in public service. His appointment as the Tourism Minister reflects the government’s focus on bringing in experienced and capable leaders to shape the future of the tourism sector in India.

As the Tourism Minister, Shri G. Kishan Reddy is entrusted with the responsibility of formulating and implementing policies to promote the tourism industry in the country. He is expected to work towards enhancing India’s tourist attractions, developing tourism infrastructure, and supporting initiatives that boost both domestic and international tourism.

Under the leadership of Shri G. Kishan Reddy, it is anticipated that there will be a renewed focus on leveraging technology and digital platforms for tourism promotion, as well as implementing sustainable tourism practices. The minister’s experience in the field of governance and public administration will likely contribute to the formulation of effective policies and strategies for the growth of the tourism industry in India.

Additionally, Shri G. Kishan Reddy is expected to collaborate with various stakeholders, including state tourism boards, travel associations, and industry professionals, to drive tourism growth and enhance India’s image as a preferred tourist destination. His role also extends to fostering partnerships with foreign governments and international organizations to promote India’s tourism potential on a global scale.

Overall, as the current Tourism Minister of India, Shri G. Kishan Reddy assumes a crucial role in guiding and shaping the tourism sector in the country. With his experience, leadership, and commitment to public service, he is expected to contribute significantly to the growth and development of the Indian tourism industry.

Achievements and Initiatives of the Present Tourism Minister

Since assuming office as the Tourism Minister, Shri G. Kishan Reddy has demonstrated his commitment to promoting and developing the tourism industry in India. He has spearheaded various initiatives and achieved notable milestones in his tenure. Let’s explore some of the key achievements and initiatives of the present Tourism Minister:

• Digital initiatives for tourism promotion: Shri G. Kishan Reddy has emphasized the use of digital platforms and technology to promote tourism in India. Under his leadership, initiatives like e-visa facilities, online tourism promotions, and digital campaigns have been launched to enhance the reach and accessibility of India’s tourism offerings.
• Promotion of domestic tourism: Recognizing the potential of domestic tourism, the Tourism Minister has focused on promoting domestic travel within India. Through campaigns like “Dekho Apna Desh” (See Your Own Country), he encourages Indians to explore the beauty and diversity of their own country, thus stimulating local economies and spreading tourism benefits to lesser-known destinations.
• Sustainable tourism practices: Shri G. Kishan Reddy has emphasized the importance of sustainable tourism practices for long-term growth and conservation. Initiatives such as promoting eco-tourism, encouraging responsible travel behavior, and supporting the conservation of natural and cultural heritage sites have been key focal points of his tenure.
• Enhancing tourism infrastructure: To improve the tourism experience in India, the present Tourism Minister has worked towards enhancing tourism infrastructure. Efforts have been made to develop and upgrade tourist amenities, safety measures, accommodation facilities, and transportation networks, thereby ensuring a comfortable and enjoyable experience for visitors.
• Promoting India as a MICE destination: Meetings, Incentives, Conferences, and Exhibitions (MICE) tourism is an emerging segment with immense potential. Shri G. Kishan Reddy has actively promoted India as a preferred MICE destination, showcasing its state-of-the-art convention centers, world-class hotels, and diverse offerings for business and professional events.

These are just a few examples of the achievements and initiatives undertaken by the present Tourism Minister to promote and develop the tourism industry in India. By leveraging technology, focusing on sustainability, enhancing infrastructure, and diversifying tourism offerings, Shri G. Kishan Reddy aims to position India as a leading global tourist destination.

Challenges Faced by the Tourism Minister in India

While the role of the Tourism Minister in India is crucial in driving the growth and development of the tourism sector, there are several challenges that they face. These challenges can have an impact on the implementation of policies, promotion of tourism, and overall progress of the industry. Let’s explore some of the key challenges faced by the Tourism Minister:

• Infrastructure development: One of the major challenges faced by the Tourism Minister is the need for comprehensive infrastructure development. While there have been efforts to improve transportation networks and accommodation facilities, there is still a need for further investment in developing world-class infrastructure across various tourist destinations.
• Marketing and promotion: Effective marketing and promotion are vital for attracting tourists to India. The Tourism Minister faces the challenge of reaching out to a diverse range of potential tourists through targeted marketing campaigns and creating a compelling brand image for India as a tourist destination.
• Sustainable tourism practices: Balancing tourism growth with sustainable practices is a significant challenge faced by the Tourism Minister. It involves implementing measures to protect the environment, preserve cultural heritage, and ensure the well-being of local communities while still promoting tourism and economic growth.
• Safety and security: Ensuring the safety and security of tourists is of utmost importance. The Tourism Minister must address issues related to tourist safety, including crime prevention, emergency response systems, and the establishment of tourist police units in popular destinations.
• Quality of services: Maintaining high standards of services, including hospitality, transportation, and tour operations, is essential to provide an exceptional tourism experience. The Tourism Minister faces the challenge of ensuring consistent quality across different tourist destinations and service providers.

Additionally, external factors such as geopolitical tensions, natural disasters, economic downturns, and global health crises pose additional challenges that can adversely affect the tourism sector. The Tourism Minister must navigate through these challenges and implement strategies to mitigate their impact on the industry.

Overcoming these challenges requires collaboration between the government, tourism industry stakeholders, local communities, and international partners. It is essential for the Tourism Minister to address these challenges proactively and implement sustainable solutions to foster the growth and resilience of the Indian tourism industry.

Future Plans and Outlook for the Tourism Sector in India

The future of the tourism sector in India holds immense potential for growth and development. Under the leadership of the Tourism Minister, Shri G. Kishan Reddy, several plans and strategies are being formulated to shape the future of the industry. Let’s explore the future plans and outlook for the tourism sector in India:

• Promotion of sustainable tourism: The focus on sustainable tourism practices is expected to continue in the future. The Tourism Minister aims to promote responsible travel behavior, eco-tourism initiatives, and conservation efforts to ensure the long-term sustainability of the tourism sector. This includes initiatives to protect natural habitats, preserve cultural heritage sites, and encourage community participation in tourism development.
• Digital transformation: Technology will play a crucial role in the future of the tourism sector in India. The Tourism Minister aims to leverage digital platforms, big data analytics, and artificial intelligence to enhance tourism promotion, improve visitor experiences, and streamline administrative processes. This includes initiatives such as developing smart tourism destinations, enhancing online booking systems, and utilizing virtual reality and augmented reality technologies for immersive tourism experiences.
• Enhancing infrastructure: The development of tourism infrastructure will continue to be a priority. The Tourism Minister plans to invest in upgrading transportation networks, improving connectivity to remote areas, and developing tourist-friendly amenities and facilities. This includes the development of new airports, railway connections, and the promotion of sustainable modes of transportation.
• Promotion of niche tourism: To diversify tourism offerings, niche tourism segments such as adventure tourism, wellness tourism, cultural tourism, and religious tourism will receive increased attention. The Tourism Minister aims to develop niche tourism products, create specialized itineraries, and promote unique experiences to attract specific target markets and cater to diverse traveler interests.
• Partnerships and collaborations: Collaborations with international tourism organizations, foreign governments, and private sector stakeholders will be crucial for the future growth of the tourism sector. The Tourism Minister aims to build strategic partnerships to promote India as a preferred tourist destination, attract more international tourists, and enhance cultural exchange and tourism cooperation with other countries.

The outlook for the tourism sector in India is optimistic, with a focus on sustainable growth, technological advancements, and diversification of offerings. As the Indian tourism industry continues to evolve, it is expected to contribute significantly to the country’s economic growth, job creation, and cultural exchange with the rest of the world.

However, it is important to address the challenges faced by the sector, such as infrastructure development, marketing, safety, and quality of services, to ensure a sustainable and competitive tourism industry. By implementing robust policies, fostering collaborations, and embracing innovation, the future of the tourism sector in India looks promising and poised for continued success.

The role of the Tourism Minister in India is pivotal in shaping the growth and development of the tourism sector, which plays a significant role in the country’s economy. The current Tourism Minister, Shri G. Kishan Reddy, has been actively involved in promoting India as a preferred tourist destination, implementing sustainable tourism practices, and enhancing tourism infrastructure.

Through digital initiatives, emphasis on domestic tourism, and promotion of niche tourism segments, the Tourism Minister is working towards diversifying India’s tourism offerings and attracting a wide range of travelers. The focus on sustainability, technology, and collaboration with key stakeholders sets the stage for a promising future for the Indian tourism industry.

However, challenges such as infrastructure development, marketing, safety, and service quality need to be addressed to ensure the sustainable and competitive growth of the sector. By tackling these challenges head-on and implementing effective policies, the Tourism Minister can create an enabling environment for the tourism industry to thrive.

Looking ahead, the future of the tourism sector in India holds immense potential. With the Tourism Minister at the helm, there is a clear vision to leverage technology, promote sustainable practices, enhance infrastructure, and forge strategic partnerships. The future plans and outlook for the Indian tourism sector signal a positive trajectory, allowing the country to capitalize on its rich cultural heritage, natural landscapes, and diverse tourism offerings.

The continued growth of the Indian tourism industry will contribute to economic prosperity, employment generation, and cultural exchange. It is through the collective effort of the Tourism Minister, government entities, tourism stakeholders, and the support of the people that India can establish itself as a sustainable, inclusive, and globally recognized tourism destination.

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PM addresses G20 Tourism Ministers’ Meet

“India’s approach to tourism is based on the ancient Sanskrit verse ‘Atithi Devo Bhavah’ which means ‘Guest is God’”

“India’s efforts in the tourism sector are centered on preserving its rich heritage while creating a world-class infrastructure for tourism”

“In the last nine years, we have placed special emphasis on developing the entire ecosystem of tourism in the country”

“India is also recognizing the relevance of the tourism sector for the speedy achievement of Sustainable Development Goals”

“Collaboration among governments, entrepreneurs, investors and academia can accelerate technological implementation in the tourism sector”

“Terrorism divides but Tourism unites”

“The motto of India’s G20 Presidency, ‘Vasudhaiva Kutumbakam’ – ‘One Earth, One Family, One Future’ can itself be a motto for global tourism”

“You must visit the festival of democracy in the mother of democracy”

The Prime Minister, Shri Narendra Modi addressed the G20 Tourism Ministers’ Meet held in Goa via video message today.

Addressing the gathering, the Prime Minister invoked the spirit of Incredible India and said that the tourism ministers rarely get a chance to be tourists themselves even though they are handling a sector worth over two trillion dollars globally. Noting that the G20 Tourism Ministers’ Meet is taking place in Goa, one of the major tourist attractions in India, the Prime Minister urged the dignitaries to take out some time from their serious discussions and explore the natural beauty and the spiritual side of Goa.

The Prime Minister said that India’s approach to tourism is based on the ancient Sanskrit verse ‘Atithi Devo Bhavah’ which means ‘Guest is God’. Shri Modi emphasized that tourism is not just about sightseeing but it is an immersive experience. “Be it Music or Food, Arts or Culture, the diversity of India is truly majestic”, the Prime Minister continued, “From the high Himalayas to dense forests, dry deserts to beautiful beaches, adventure sports to meditation retreats, India has something for everyone.” The Prime Minister informed that India during its G-20 presidency is organizing nearly 200 meetings in 100 different locations all over the country making every experience different from the other. “If you ask your friends who have already visited India for these meetings, I am sure that no two experiences will be alike”, he added.

The Prime Minister underlined that India’s efforts in the tourism sector are centered on preserving its rich heritage while creating a world-class infrastructure for tourism. Noting that India attracts pilgrims of every major religion of the world, the Prime Minister emphasized the development of spiritual tourism as one of the focus areas. He informed that the infrastructure upgrade in the eternal city of Varanasi, one of the major spiritual centers, led to a ten-fold increase in pilgrims taking the number to 70 million today. He also underlined that India is creating new tourist attractions and gave the example of the Statue of Unity, the tallest statue in the world, which attracted about 2.7 million tourists within a year of its inauguration. In the last nine years, the Prime Minister said, we have placed special emphasis on developing the entire ecosystem of tourism in the country. “From transport infrastructure to the hospitality sector to skill development, and even in our visa systems, we have kept the tourism sector as a focal point of our reforms”, Shri Modi said. He highlighted that the hospitality sector has great potential for employment generation, social inclusion and economic progress while employing more women and youth compared to the other sectors. The Prime Minister expressed happiness that India is also recognizing the relevance of the tourism sector for the speedy achievement of Sustainable Development Goals.

The Prime Minister highlighted that the five inter-connected priority areas of Green Tourism, Digitalization, Skill Development, Tourism MSMEs, and Destination Management reflect the priorities of India as well as the Global South. Shri Modi suggested greater use of emerging technologies like artificial intelligence and augmented reality to drive innovation and highlighted that India is working towards artificial intelligence enabling real-time translation of various languages spoken in the country. He expressed confidence that collaboration among governments, entrepreneurs, investors and academia can accelerate such technological implementation in the tourism sector. The Prime Minister also suggested working together to ease business regulations for tourism companies and assist them in increasing their access to finances and investing in skill development.

“Terrorism divides but Tourism unites”, the Prime Minister remarked. He said that tourism has the potential to unite people from all walks of life thereby creating a harmonious society. Shri Modi expressed happiness that a G20 Tourism dashboard is being developed in partnership with UNWTO which will be a first-of-its-kind platform bringing together best practices, case studies and inspiring stories. The Prime Minister expressed confidence that the deliberations and the ‘Goa Roadmap’ would multiply the collective efforts to realize tourism’s transformative power. “The motto of India’s G20 Presidency, ‘Vasudhaiva Kutumbakam’ – ‘One Earth, One Family, One Future’ can itself be a motto for global tourism”, he added.

The Prime Minister highlighted the upcoming Sao Joao Festival in Goa and said that India is a land of festivals. Referring to the General Elections to be held next year, the Prime Minister urged the dignitaries to witness the festival of democracy in the mother of democracy where nearly a billion voters will be taking part for over a month re-affirming their abiding faith in democratic values. “With more than a million voting booths, there will be no shortage of places for you to witness this festival in all its diversity”, the Prime Minister said. He concluded the address by extending an invitation to visit India during the festival of democracy.

LIVE. PM @narendramodi 's remarks at the G20 Tourism Ministers' Meeting. @g20org https://t.co/EhD5WJ9SI1 — PMO India (@PMOIndia) June 21, 2023

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Ministry of Tourism - India

The Ministry of Tourism in India is the nodal agency for promoting tourism in India. The Ministry of Tourism makes programmes, formulates national policies, and coordinates the activities of various central government agencies, state governments, union territories, and private agencies for the promotion of tourism in India.

Ministry of Tourism, India – Important Facts

• The Ministry of Tourism in India is headed by the Union Minister for Tourism and Ministers of State.
• Currently, the Minister of Tourism is G Kishan Reddy.
• The Ministers of State for Tourism are Ajay Bhatt and Shripad Yesso Naik.
• The Secretary of Tourism is the administrative head of the Ministry of Tourism.
• India Tourism Development Corporation Limited (ITDC) is a public sector undertaking under the Ministry of Tourism.

Ministry of Tourism, India – Roles and Functions

Some of the roles and functions of the Ministry of Tourism are given below:

Infrastructure Development

More than fifty per cent of the Ministry of Tourism’s expenditure on plan schemes is incurred for the development of quality tourism infrastructure at various tourist destinations and circuits in the States/ UTs. The roles and responsibilities of the Ministry of Tourism, India, under infrastructure development are given below:

• Conventions and conferences
• Hospitality programmes
• Field publicity, marketing, and promotions
• Tourist information and facilitation
• Release of incentives

Coordinating the Activities of Field Offices and Their Supervision, Regulation:

• Approval of tourist transport operators, inbound tour operators, travel agents, etc.
• Approval and classification of restaurants and hotels.

International Co-operation and External Assistance

• Foreign technical collaboration
• External assistance
• Bilateral agreements
• International bodies

All Policy Matters

• Investment facilitation
• Promotion and marketing
• Manpower development
• Development policies

Top 10 Source Countries for Foreign Tourist Arrivals (FTAs) in India in 2020

The below given top 10 countries constitute around 66% of the total foreign tourist arrivals in India.

• United States of America
• United Kingdom

Top 8 International Check Posts for Foreign Tourist Arrivals (FTAs) in India in 2020

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Frequently Asked Questions (FAQs)

Who is the current tourism minister of india, what are the 4 new types of tourism, who is the father of tourism, which is the no. 1 tourist place in india, which city has the most tourists in india.

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About The Ministry

The Ministry of Tourism, is the nodal agency for the formulation of national policies and programs and for the co-ordination of activities of various Central Government Agencies, State Governments/UTs and the Private Sector for the development and promotion of tourism in the country. The Ministry is headed by the Union Minister for Tourism and Ministers of State.

The administrative head of the Ministry is the Secretary (Tourism). The office of the Director General of Tourism provides executive directions for the implementation of various policies and programs. Directorate General of Tourism has a field formation of 20 offices within the country and one sub-ordinate office/project i.e. Indian Institute of Skiing and Mountaineering (IISM)/ Gulmarg Winter Sports Project. The field offices in India are responsible for providing information service to tourists and to monitor the progress of field projects. The activities of IISM/GWSP have now been revived and various Ski and other courses are being conducted in the J&K valley.

The Ministry of Tourism has a public sector undertaking, the India Tourism Development Corporation Limited and the following autonomous institutions:

• Indian Institute of Tourism and Travel Management (IITTM) and National Institute of Water Sports (NIWS)
• National Council for Hotel Management and Catering Technology (NCHMCT) and the Institutes of Hotel Management.

Role and Functions of the Ministry of Tourism

The Ministry of Tourism functions as the nodal agency for the development of tourism in the country. It plays a crucial role in coordinating and supplementing the efforts of the State/Union Territory Governments, catalyzing private investment, strengthening promotional and marketing efforts and in providing trained manpower resources. The functions of the Ministry in this regard mainly consist of the following:

All Policy Matters, including:

• Development Policies.
• Incentives.
• External Assistance.
• Manpower Development.
• Promotion & Marketing.
• Investment Facilitation.

Planning & Co-ordination with other Ministries, Departments, State/UT Governments., Regulation:

Infrastructure & Product Development.

Human Resource Development

• Institutions.
• Setting Standards and Guidelines.

Publicity & Marketing:

• Strategies.
• Co-ordination.

Research, Analysis, Monitoring and Evaluation

International Co-operation and External Assistance

• International Bodies.
• Bilateral Agreements.
• Foreign Technical Collaboration

Legislation and Parliamentary Work, Establishment matters, Vigilance matters, Implementation of official language policy, Implementation of official language policy, Budget co-ordination and related matters, Plan-coordination and monitoring

The Functions of Attached Office viz. Directorate General of Tourism are as under:

Assistance in the formulation of policies by providing feedback from the field offices and Monitoring of Plan Projects and assisting in the Plan formulation

Coordinating the activities of field offices and their supervision, Regulation:

• Approval and classification of hotels and restaurants.
• Approval of travel agents, Inbound tour operators and tourist transport operators, etc.

Inspection & Quality Control

• Guide service
• Complaints and redressal.

Infrastructure Development:

• Release of incentives.
• Tourist facilitation and information.
• Field publicity, promotion & marketing.
• Hospitality programs.
• Conventions & conferences.

Assistance for Parliamentary work.

Establishment matters of Directorate General of Tourism

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New Delhi: The Maldivian economy has a “good growth trajectory” this year, with the major issue for the government being one of “managing the cash flow”, former finance minister of Maldives Ibrahim Ameer told ThePrint.

“How would the government manage its finances? That is the major difficulty before them. Last year, our government [the previous Maldivian government] targeted expenditure cuts of about 3 percent of the total gross domestic product (GDP). We could not complete it due to it being an election year,” Ameer said. 

The former finance minister added, “What they did was increase the recurring expenditure. There are more than 2,000 political appointees made by this government. Our government had only 700. This has increased expenditure on salaries by 200 million [Maldivian] rupiah.”

On Wednesday, the island country’s long-term debt was downgraded by Fitch Ratings, a US credit rating agency, to ‘CCC+’ from ‘B-’ due to the nation’s “worsening external financing and liquidity metrics”. By policy, the agency does not assign viewpoints to sovereign bonds with a rating of CCC+ or below, indicating its ‘junk bond’ status.

The American rating agency said in a statement that Maldives’ “weakening foreign-reserve buffers and rising external government debt” increases the challenge for the Mohamed Muizzu-led government to meet its future external debt-servicing obligations. 

In May, the country’s foreign exchange reserves fell to $492 million from $748 million a year ago , indicating a persistent current account deficit — the total value of imports being higher than the total value of exports. 

Fitch has forecast the country’s foreign-reserves coverage of external payments to be less than a month’s worth (0.9 month) this year. This is well below the projected median of 4.2 months. The agency has also pointed out that for the rest of this year, the Maldivian government has $233 million in sovereign external debt servicing obligations and $176 million in publicly guaranteed external financing obligations. 

Next year, the amount will rise to over $500 million and by 2026, it will cross $1 billion , the agency said.

“The government’s commitment to reform was highlighted by the Cabinet’s endorsement of the fiscal reform agenda this week…In their statement, Fitch has indicated that a fiscal trajectory aimed at consolidating public debt levels could result in an upward revision of current ratings,” the Maldivian finance ministry said in a statement Thursday. 

The state of the Maldivian economy, however, “is as bad as it could get at this time”, Aditya Gowdara Shivamurthy, an associate fellow at the Observer Research Foundation (ORF), told ThePrint. 

“As an island country, Maldives depends a lot on imports. The government subsidises health and education. This, along with its reliance on state-owned enterprises (SOEs) as a political tool despite its consistent losses, are some of the reasons for the current situation,” said Shivamurthy. 

Ameer said that the previous government led by former President Ibrahim Solih, which he was a part of, focused on reforming these subsidies keeping in mind the economic situation of the country. 

“However, instead of focusing on completing the necessary reforms, this government has made the situation worse,” said Ameer. 

The country, with a population of five lakh, had a total debt worth $8 billion in 2023. This is roughly equivalent to 122.9 percent of its total gross domestic product (GDP), according to the World Bank . 

Also read: How can India regain footing in Maldives? Keeping China out is the Great Game at Delhi event

External shocks to Maldives and its impact 

The country relies on foreign imports, especially for its energy needs. During the first quarter of 2024, Maldives imported petroleum products worth a little over $200 million, a 25 percent increase from the same period last year, according to the Maldivian Monetary Authority (MMA). 

Overall exports in April, however, fell by one percent in comparison to the same month the year before, according to the MMA, highlighting the growing current account deficit and the resulting worries about the state of its economy. 

“The Maldives does not have a production base of its own. The crisis in Russia and West Asia has impacted fuel prices, which has led to an increase in inflation. This increase indicates that repayment values for its loans have also increased. Nevertheless, economically unviable mega projects continue in the country,” said Shivamurthy. 

Ameer explained that the country has faced two major shocks in recent years which affected its growth and economic health — the Covid-19 pandemic and the conflict between Russia and Ukraine. 

“The Covid-19 pandemic shocked the world in 2020. We took the necessary measures, fully knowing the side-effects. The stimulus package by the government saw close to a 40 percent growth in GDP in 2021. However, in 2022, we faced another crisis because of the war in Ukraine,” said Ameer. 

The pandemic shut the country’s major revenue source — tourism. However, for the last three years, the industry has been growing, with more tourists flocking to the nation’s white beaches and clear waters. 

“Tourist arrivals have been increasing. Last year, it touched two million. This year, it already touched one million arrivals till June. This points to a healthy trajectory for the Maldivian economy. However, tourist arrivals have dropped from India and that has had an impact,” explained Ameer.

India was the top country in terms of number of tourist visits to Maldives, but as of 24 June this year, its position in terms of the number of tourist visits has dropped to sixth. This comes after a diplomatic spat earlier this year, as part of which deputy ministers in the Maldivian government made derogatory remarks about Prime Minister Narendra Modi. 

Also read:   Bullying Maldives is India’s latest gladiator sport. It’s not how strong nations behave

Mega infrastructure projects

In recent years, the country has been pushing mega infrastructure projects, funded by foreign loans, including the Greater Malé Connectivity Project, which is a bridge being constructed to link Maldivian capital Malé with surrounding islands. India has given a grant of $100 million and extended lines of credit worth $400 million for the Greater Malé Connectivity Project. 

The push for grand infrastructure projects started a little over a decade ago, with then president Abdulla Yameen relying on Chinese loans to boost employment and economic growth. In 2018, former president Solih looked to New Delhi to service the investment needs for such infrastructure projects. 

This has left current president Muizzu with large external debt obligations. His government has requested New Delhi and Beijing to restructure these loans. Earlier this year, the State Bank of India rolled over a $50 million loan for another year, giving Malé a breather. 

New Delhi also extended budgetary support assistance to the debt-ridden nation. 

“China has realised Maldives is in trouble. Beijing has said it will not offer new loans, especially if Malé wishes to restructure the current ones. Since the government does not have much revenue, even state-owned enterprises have not taken up new projects,” said Shivamurthy. 

He also pointed out that in recent years, the total Chinese debt stock has reduced, while the Indian debt stock has increased, indicating that Malé has been focusing on “paying off loans” to Beijing. 

“About 60-65 percent of India’s committed loans are yet to be disbursed, as it is project oriented. However, Malé has been focusing on repaying Chinese loans through their revenue collections,” said Shivamurthy.

(Edited by Radifah Kabir)

Also read:   China has changed the equation for India’s neighbours. New Delhi can’t neglect them anymore

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