The phenomenal increase in national income has motivated many countries, particularly the developing countries like India to go the extra mile to attract the high spending international tourist. According to a recent estimate, all tourist activities yield more than Rs.250 crores annually through direct and indirect taxes to the central and state governments of India. The income from tourism is the ‘multiple’ of what a foreign tourist spends in a country. The nature of the ‘tourist expenditure multiplier’ and its after effects are many in number.

The money spent by the tourists (tourist expenditure) goes into quick circulation and permeates the economy on a wider scale. It is not only the few clearly defined occupations which benefit from the flow of the tourist money, but nearly very branch of a country’s economy has some impact from it. Its services and the products offered for which he pays have a percolating effect in the local economy. As the hotel receives the money, it does not hold on to it, rather it spends it to meet the various costs and other expenses involved for providing world class services to the tourists. In meeting these costs, money is passed on to others not directly connected with the hotel, which, in turn, pass on a substantial portion of the same to still other people.

In addition to the revenue earned by the payment for goods and services by the tourists, there are other kinds of related financial transactions, which have a similar effect.
These involve
(1) Investments made by external sources;
(2) Spending by governments on tourism internally or externally; and
(3) Exports of goods and services generated by tourism and allied industries.

These transactions are also treated as tourist expenditure which could be classified as direct (primary) and indirect or induced (secondary) depending upon the manner in which it takes place. In Kerala vacations are now emerging as a favorite past time for the domestic traveler. Even the prominent tourist centers within a city are now full of locals during a holiday.

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