Ram-o-nomics: Economic Impact of Temple Reopening in Ayodhya
As the date for the pran pratishtha pooja in Ayodhya nears, the excitement around the Ram temple is reaching its crescendo. The cultural and historical significance of the event cannot be understated. There are not many parallels to the kind of natural experiment that we are witnessing. The reconstruction of Somnath temple in Prabhas Patan of Gujarat is, perhaps, the closest possible parallel. The pull factor created by the first of the 12 holy jyotirlingas now attracts nearly 1mn (million) visitors to the temple per month. In 2023 alone, the temple saw a footfall of 7.97mn pilgrims.
 
It is no surprise that economic opportunities created by tourism have been at the centre stage of the discussion. It is projected that Ayodhya will see a resident-to-floating population ratio of 1:10 after the opening. The daily pilgrim influx will be approximately 300K (thousand) per day.
 
What will be the economic fallout post-opening of the temple is no easy question to answer. The announcements such as public works worth Rs15,000 crore towards road connectivity by the national highways authority of India (NHAI), or the Rs85,000 crore allocated towards the Ayodhya master plan 2031 all indicate the current and future flow of funds for the creation of hard assets. But real economic benefits are the year-on-year flow of income to the resident population in Ayodhya and the adjoining districts and the subsequent rise in standards of living. This is what, in a limited sense, gross domestic product (GDP) measures.
 
However, the current scope of national income statistics (NAS) in India does not measure GDP at the district level and a previous attempt has long been discontinued. We do have state-level GDP, known as the GSDPs, which are published with reasonable frequency. However, the spatial rescaling of the GSDP to the district level is not that easy. The ministry of housing and urban affairs in 2019 did float a discussion paper on an attempt to generate annual city GDP statistics but this idea remains a work in progress.    
 
The use of alternate data such as the night light data using remote sensing is a plausible alternative but there is no use case for estimating income levels on a consistent basis using this approach. The National Remote Sensing Centre of ISRO published an atlas - Decadal Change of Night Time Light over India from Space (2012 – 2021) in 2022. But nightlight for all districts is not reported in this maiden issue.
 
The issue of income measurement is even more complicated than what we have discussed so far. For the present case, we are dealing with what is known as religious tourism. NAS does not have an explicit sector called tourism in its sectoral classification. Given the complexity and inter linkages of tourism, separate tourism satellite accounts are commonly prepared. In September 2019, the ministry of tourism, along with national council of applied economic research (NCAER), have created regional tourism satellite accounts (RTSA), 2015-16 for each state. This is the best we have, with no tourism satellite account at the district level.
 
Hence, any statistical claim of benefits or loss on account of the opening of the temple meets with rational scepticism because we do not have the required data to estimate such measures at the district level.
 
Nevertheless, RTSA does offer a promising starting point to gauge the order of magnitude of economic benefits that will accrue to the state as a whole and possibly at the district level.
 
Now when we follow RTSA, the metric of interest is the internal tourism consumption generated by the tourist population. The tourist population is classified as inbound (foreign and other states) and domestic. In Uttar Pradesh (UP), in 2015, around 1.8mn foreign tourists and 15.6mn tourists from different states visited UP and around 150mn domestic residents undertook tourist activity. The average consumption expenditure per tourist for the respective categories was respectively Rs99,000, Rs7,540 and Rs2,611. 
 
However, if we look at religious tourism alone—one of the eight identified forms of tourist activity in RTSA—then the share of this category is not that high. The wallet share of religious tourism among foreign tourists is around 3%. In case of inbound tourists from different states, 12% come for religious purposes and 3% in case of domestic tourists. The average per-tourist consumption expenditure specifically tied to religious tourism is Rs2,970, Rs11,617 and Rs2,111, respectively. The bulk of the tourist activity is on account of social reasons among inbound state tourists and domestic tourists.
 
Now, given the estimates of around 300K floating population per day, which amounts to roughly 110mn tourists per year, it is difficult to allocate these to different categories—foreign, inbound states and domestic. If we make some highly optimistic assumptions that foreign tourists more than double to 5mn, inbound state tourists also double to 30mn and the balance 75mn tourists are domestic tourists. If the share of religious tourism (3, 12, 3) is the same, then we are in for gross annual tourist expenditure of Rs6,100 crore (inflation-adjusted Rs8,600) or 26% of tourism direct gross value added. At 14.5% revenue-neutral rates, this amounts to Rs900 crore in GST!
 
Assuming the entire expenditure is destined to reach the district of Ayodhya, then, under the current level of economic development, this amount cannot be absorbed within the district economy. This implies the projected inflow of funds will spill onto adjoining districts of Amethi, Barabanki, Basti, Ambedkar Nagar, and Sultanpur. The local cement, textile, agriculture and handicraft industry may see a major boost besides the obvious beneficiary hotels and restaurants.
 
In all, it may be difficult to measure the exact impact of this event, on account of the lack of data and uncertainty in behavioural assumptions owing to deep cultural factors at play. If the population becomes more religious and the last two shares (3,12,3) double, we are looking at a business of Rs10,800 crore. Further, we have not even accounted for the spillover impact on the digital and virtual economy and the demand generated in other states and neighbouring countries in which case these benefits may rise further. With a GVA (gross value added) multiplier of 2.07 and an employment multiplier of 2.55, UP is heading for a major phase of economic growth if projected inflows materialise. 
 
In conclusion, as the Upanishads say, no language can describe Him. Hence, never mind the figures, just say Jai Shri Ram.
 
(The author is an economist in the banking system. The views expressed here are personal)
Comments
subratrick74
4 months ago
Each and every district of India needs one Ayodhya like temple this will open a door of a innovative economic model , i believe the new economic orders like setting up semiconductor packaging plant ought to be stopped immediately and get focussed for Ram o nomics. and whole world will emulate such a wonderful idea.,
vu2feo
4 months ago
JAI SHRI RAM
iaminprabhu
4 months ago
JAI SRIRAM !

JAI JAI SRIRAM !
chandram1006
4 months ago
Very unnecessarily complicated article. Not sure what the author is trying to achieve- a fairly difficult juxtaposition position of mathematics, economics with faith. Only the last sentence seems relevant. All others are just an assumed methodology.
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