"The Government had launched Incredible India Campaign to promote tourism in various parts of the country." Elaborate the impact of this campaign on foreign exchange reserves and Balance of Payment of India.

Question

Accepted Answer

The 'Incredible India Campaign' launched by the Government promotes tourism, which has the following impacts:

**Impact on Foreign Exchange Reserves:**
- Increased tourism leads to more foreign tourists visiting India
- Foreign tourists bring foreign currency and exchange it for domestic currency
- This increases the supply of foreign exchange in India
- Foreign exchange reserves of RBI increase

**Impact on Balance of Payments:**
- Tourism represents export of services (invisible item)
- Increased tourism improves the current account balance
- It reduces current account deficit or increases current account surplus
- The campaign boosts foreign exchange earnings, improving overall BOP position