Analysis: The Immense Potential Of The Ayodhya Economy

Analysis: The Immense Potential Of The Ayodhya Economy

Religious tourism has greater significance in India as faith brings in more visitors than leisure travellers

Madan SabnavisUpdated: Friday, February 02, 2024, 11:38 PM IST
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Devotees waiting to enter the Ram temple in Ayodhya | PTI

The Lord Ram temple in Ayodhya, the ultimate symbol of Hindu faith, will bring in myriads of worshippers to the town and in course of time put it in the league of other religious destinations. The potential to create a new economy is immense as structures develop to meet the demand. Can these outcomes be conjectured?

As per data reported in Indian Express, Ayodhya’ s economic size is less than 1% of that of Uttar Pradesh at around Rs 11,000 cr for FY22. The per capita income in Ayodhya was around Rs 57,000 that is lower than that of the state which was around Rs 93,000. For the country as a whole it was around Rs 1.48 lakhs. It accounted for 1.2% of UP’s population in 2011 while the urbanisation ratio was just over 14%. Per capita electricity consumption at 148 KWh was lower than state average of 291 KWh and national average of 1255 KWh in 2021-22.

However there has been a lot of focus on delivery of public services in the last few years and the ratio of LPG consumers per lakh of population was 20,236 compared with the state average of 18,309. Similarly, the length of pucca roads to 1 lakh population was higher at 181 kms relative to the state average of 147. Clearly in the run up to the great event, there has been a push given to development which has been taken on by the local authorities.

Now that the holy temple has been consecrated and opened to the public, one can see exponential development taking place to keep pace with the influx of tourists. Temples in Thirupathi and Banaras get around 50 mn tourists every year while Hardwar and Char Dham pilgrims would cross 5 mn each. Mathura which is associated with the birth of Lord Krishna gets in around 5 mn tourists every year. Goa, which is more for general tourism, gets in around 10 mn a year. Himachal state gets around 10 mn visitors every year. Quite clearly religious tourism has greater significance in India as faith brings in more visitors than leisure travellers.

Given the religious significance of the Lord Ram temple and the interest of myriads of devotees to visit the temple to seek blessings, it can be assumed that there will be rapid development across the board. As far as private interest is concerned, the prime area would be hospitality. The cost of building a hotel, depending on the quality can range from Rs 35 lakhs to Rs 2 crore per room key. Hence a hotel with 100 rooms would involve a fixed cost of Rs 35-200 crores. This would include structures, furniture, amenities like lighting, etc. Assuming that there would be a series of hotels coming up to begin with across different cost structures, the investment potential is high for sure.

Second with religious tourism rising and hotels coming up, the hospitality sector is bound to witness an increase in employment. This is a corollary as hotels and restaurants will be hiring both blue and white collared workers to run these establishments. The grandeur and significance of the Lord’s temple will attract a continuous stream of tourists that have to be served on a real time basis.

Third, as already seen, construction will receive another boost. This will include both the infrastructure development in terms of more roads and bridges being constructed but also residential buildings. Once a place becomes a hub for any activity there is a case of evolution of other construction sectors that will add to the district growth. While Ayodhya per se may not really witness the backward linkages which would accrue to the adjoining regions which supply construction material, the proliferation of retail outlets for the same would increase.

Fourth, development of any region leads to the proliferation of financial services and hence there will be more branches and ATMs opened for sure. Presently there are 178 branches with deposits of just over Rs 17,000 cr. There is scope for substantial increase in business and all banks will be keen to have a presence closer to the temple.

Fifth, FMCG companies could be sensing an opportunity to set up shop and here the onus is on the state to provide the right environment as the potential is quite large for getting in private investment. This will also enhance the business of existing kirana shops and other micro businesses which will get an opportunity to scale up.

The temple was originally conceived to be built at a cost of Rs 1800 crore and going by market estimates the cost could have touched Rs 3000 cr. This includes cost of construction, materials, machinery, labour, and other administrative expenses. The government has estimated an outlay of Rs 85,000 cr for development of the district over a period of 10 years. While this is more of intention, the sectors analysed here are more real and the benefits would be flowing in the next couple of years.

This said, there is evidently need for the state government to work harder to ensure that the basic infrastructure amenities are available or else this can be a deterrent for investors. As mentioned earlier UP does lag the national standards on several counts and provision of power and good roads with civic amenities are a must to ensure that the district economy develops along with the attractiveness of tourists. While the temple is in urban Ayodhya it has been seen that all the adjoining areas in the semi-urban surrounding develop simultaneously which can hence be leveraged well with the right policies in place. Hence there is a longer distance that the municipal of Ayodhya as well as the state government should go to ensure that there is balanced focus so that these loose ends are connected.

It can be seen that in the coming years religious tourism adds a new dimension to economic growth as there is increased interest of the population. It also gives some hints to the other states to work towards improving conditions around religious places of interest as it will help to foster faster growth.

The author is Chief Economist, Bank of Baroda and author of ‘Corporate Quirks: The Darker Side of the Sun’. Views are personal

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