Tourism Ministry to use new methodology for FEE estimation

New Delhi, Dec 26 (UNI) The Tourism Ministry today admitted ''deficiencies'' in the current methodology used by it for estimation of Foreign Exchange Earnings (FEE) from tourists, and announced introduction of a new system by which its figures would be in conformity with those of the Reserve Bank of India (RBI).

Tourism Secretary Shilabhadra Banerjee told mediapersons here today that from December this year, his ministry would use, the same methodology that was being used by the RBI whose figures were the basis for the United Nations World Tourism Organisation (UNWTO).

The current methodology of the Tourism Ministry substantially underestimated the FEE from tourism, particularly from the year 2003 onwards.

''Actually, the underestimation has been in the range of 26 to 36 per cent since 2003 and that the extent of underestimation is increasing over the years,'' he said.

In this context, he pointed out that the FEE estimation of the Ministry for the year 2006 was Rs 29,604 crores, whereas the figures of the RBI for the period was Rs 40,375 crore. Thus, the underestimation was to the tune of 36.38 per cent.

Under the current methodology used by the ministry, the FEE ratio is being inflated with the use of Wholesale Price Index (WPI) number released by the Ministry of Commerce and Industry.

The ministry will now use Consumer Price Index (CPI) and Urban Non-Manual Employees (UNME) for inflating the FEE as is being done by the RBI.

''The WPI is not a proper index for inflating the ratio as it does not include any services in its composition. But, the CPI-UNME includes such services as transport and communication, housing and recreation and amusement,'' Mr Banerjee said.

He said since RBI was the agency responsible for compilation of Balance of Payment (BoP) statistics in India, and its data was the official one, the Tourism ministry had to revise its estimates of FEE from tourism so that these were in conformity with the RBI figures.

Explaining the implications of the adoption of new methodology, Mr Banerjee said the estimated FEE for 2005 and 2006 would be Rs 7.49 and 8.93 billion dollars respectively in place of the current estimates (by Tourism Ministry) of Rs 5.73 and 6.57 billion dollars.

The revised figure for 2007 (till November) would be Rs 9.16 billion dollars in place of the current figure of 6.32 billion dollars.

''The adoption of the new methodology will reduce tha variation in Tourism Ministry's advance estimates and RBI figures to the level of about five per cent in place of the current divergence in the range of 30 to 40 per cent.'' UNI