Tourism Finance

The immense growth of tourism in India over the last three decades has required equally immense capital investment, hundreds of billions of dollars have been pumped into this sector. While private capital has driven some of the growth in this industry, it is the largesse of public funding and IFIs (International Financial Institutions), like the World Bank and Asian Development Bank, that have put India’s tourism industry on steroids.

Since the 1990s, International Finance Institutions (IFIs) have found it easy to operate in India where governing bodies were happy to make ’adjustments’ and a deregulated and fully liberalised tourism economy had erased spaces for local communities to raise their voices.

IFIs fund projects that are planned away from the public gaze and without substantial participation of organisations that work with local communities in analysing the social and ecological impacts of tourism.60 In India, local communities have time and again opposed these projects.

The influence of IFIs on national economic policies has been consistently increasing. In the last decade, PPPs were introduced and there has been tremendous pressure on the state to institutionalise this model of development. As a result of this, the Department of Economic Affairs, within the Ministry of Finance announced a draft PPP Policy, 2011. The National Land Acquisition and Rehabilitation & Resettlement Act also mentioned and made special provisions for PPP projects.

The nature and impacts of tourism cross boundaries and affect entire regions and there is an increasing global discontent and community protest against the interventions of IFIs in developing countries. Yet, their funding of projects and role in the growth of the tourism industry in India continues to affect livelihoods and policies across the country. Areas such as Bekal, Mahabalipuram, Kovalam and Sindhudurg where IFI funded projects have had more power than local interests in the development of tourism have turned into enclaves of investment, exploitation and isolation from their surroundings. These have left natural resources exploited, communities displaced and destinations spent.

EQUATION analyses the role of IFIs in structural adjustments of the economy, state development projects and policy reform. We also examine the growth of Public-Private-Partnership model of development back by the government and pushed by IFIs.

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