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January 10
07:13 2017


As per the latest reports, there has been a 9.3 rise in the foreign tourist arrivals in the month of November 2016. According to the Times of India “Foreign tourist arrivals during November 2015 was 8.16 lakh, while it was 8.91 lakh in November 2016”. 

The Positive Side of the Demonetization Story for Tourism.

Initially things did look a little dull and tardy but there is definitely a brighter side to the story. One of the biggest concerns for foreign tourists in India is that they are charged unusually higher rates as compared to their Indian counterparts and often feel cheated or victimized. From autowalas who charge unreasonably high rates to tourist guides, the foreign tourist is often an easy victim of deception and deceit. This fraudulent bias in prices is perhaps the biggest impediment in the way of the Indian tourism Industry. Now that every penny will become accounted for, a lot of businesses will refrain from illegal practices including that of charging ludicrously high rates from foreign travelers. When payments are made online prior to travel or any activity, it will discourage the malpractice of charging exorbitant rates. This will create a more trust worthy, a more credible environment for the tourism industry to flourish in the coming years. This will also be a huge sigh of relief for the tourist who has felt stuck in the web of lies and deceit. Simultaneously, when the tourism industry flourishes, it will open up new venues for the creation of jobs and opportunities for employment. Small time players in the industry including vendors and home stay providers will feel more included in the big race, being compelled to create an online presence in order to survive or excel. Hoteliers and restaurateurs are in high hopes of getting positive signs in a span of six-twelve months!


In a big announcement on the 8th of November 2016, the Prime Minister of India banned the use of 500 and 1000 rupee notes with immediate effect. The decision to rule out the currency from the Indian market brought about a revolution in the country.

From Kashmir to Kanyakumari; with ATMs and Banks being crowded by people since the early mornings to late in the night, the country literally came to a standstill. India had come into a dire cash crunch- a situation that could have never been previously envisioned. This sent the entire nation into a state of pandemonium whilst their hunt for new currency and for depositing the old notes- “the new illegal tender”. The sudden announcement took an unprecedented toll not just on the people of India and their day-to-day expenses but also on travelers and tourists from all over the world. Because most tourists travel with a limited amount of cash, mostly in easy-to-carry denominations of 500’s and 1000’s, the Government’s sudden move put the desperate tourist in a state of absolute bewilderment and panic. The unsuspecting budget tourists were in fact the ones totally caught off-guard; they being the ones who had chosen India as their vacation spot in order to relish the “real Indian experience” of taking public transport or eating from local eateries by hoarding their life savings for making the trip. Conversely, the tourists who remained largely unaffected by the sudden declaration were the ones who had already made online bookings prior to travel through online travel portals or through the agency of some international travel agents.

Indian E-Commerce websites like Paytm have become more robust in the days following the demonetization and is a boon to Indian travelers for making instant payments. A lot of local eateries and small shops have ensured this payment provision is made available to its customers or have made arrangements to procure card reader machines. On the contrary, foreign travelers without Indian connections were left clueless about the various payment options or are not entitled to use such alternate options. Various instances, ranging from having to dine at Langars in Gurdwaras or having to flee a restaurant without paying for the food out of sheer desperation are only a couple of news-worthy yet extremely daunting experiences faced by unsuspecting foreign travelers at this significant period in Indian history. Though the real impact of the demonetization on the tourism industry is yet to be seen and is hopefully positive, we will try to analyze the various scenarios that might have affected tourism at various stages of the demonetization process and the repercussions that immediately followed the decision:

Tourists took their steps back!

Being stuck in a strange country without hard cash or other forms of payment reads more like the script of some adrenaline pumping, real time, crime-thriller movie. But this was indeed the plight of the many tourists who found themselves in India at the time of the demonetization. Travelers had no acceptable currency with them to travel and pay for the taxis, hotels and adventures. Tourists who arrived in India with foreign currency also struggled to procure enough cash as even the airport currency exchange counters ran dry almost instantaneously, falling short by 50% of the demand. As per a report from The Times of India, even reputed Forex dealers like Thomas Cook said that they were not initially able to cater to the growing monetary demands from tourists. This crisis had also negatively impacted the local money changers.

Also, travel and tourism from India had come to a sudden unexpected halt albeit the long term reverberations are yet to be witnessed. The Indians travelling abroad were faced with cash crunch, their hidden money being rendered worthless. Therefore, the stats of Indian tourists had plummeted in locations like Switzerland, Europe, Dubai etc. which are the most popular tourist destination for Indians today especially for the millennials.

The reduction in footfall.

What followed after the big day was a silence on the streets as well as famous tourist destinations. People had become smarter with their use of currencies in purchasing even the basic necessities and resorted to making online payments or card transactions. Those who had bank accounts as well as access to ATMs went to withdraw the new currency. While the people who had only limited means and no access to bank did not wander around uselessly and saved put their currency to better use! Thus when it came to tourist spots like zoos and historical places the footfall decreased significantly.

Hotels and restaurants faced an all-time low the next few days.

The hotels and restaurants in India were the biggest sufferers in the tourism industry as there were very less bookings for a few days. Many bookings made on the ‘Pay at Venue’ were cancelled due to the monetary and business crunch. The handful of bookings that came was from international travelers and tourists who had booked online. The initiatives and offers for online bookings and the discounts on availing online bookings made no big effect and continued to be at the lowest in the country. Hotels and restaurants had faced a decline in their business.

Restaurants had a tough time with venues facing empty evenings for sometime. The street food stalls were affected the most as they had no means of accepting card transactions or online money. Their sales reduced  drastically.

The foreign travelers’ problem!

A lot of foreign travelers were stuck with the currency crunch as the most prominent notes of acceptances had been banned. As foreigners have no bank accounts in the country it meant they could not get their money exchanged easily. The immediate week had people standing in long queues which resulted in lesser foreigners migrating to India for traveling and a cancellation of a lot of booking from their part. This reduced the number of foreigners travelling to India thereby cutting off a major chunk of income generated through travel and tourism.

Let us hope that once these temporary problems are dealt with, we will be able to witness a more robust, more welcoming environment for the tourism industry to flourish, thanks to the demonetization.

Disclaimer: The latter part of the article deals with possible scenarios with respect to tourists and tourism in India immediately following the demonetization announcement and should not be considered as a comprehensive report on the tourism industry in the year 2016. The image is for representative purposes only.

Image Credits:Luigi Guarino Via under the Creative Commons Legal Code

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Anju Lopez

Anju Lopez

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