PROJE

CT
HYPOTHESIS TESTING
REPOR ON
T INDUSTRY OF INDIA
TOURISM

SUBMITTED TO Submitted BY:

PROF. PRAVEEN KUMAR Pranshu Agrawal
251105 – FMG 25(B)
Table of Contents

Introduction...........................................................................................................................................1
Hypothesis testing.................................................................................................................................8
Hypothesis 1 - Test of issue of utilization certificate.........................................................................8
Hypothesis 2 - Test for finding if Centre is more biased towards AP.................................................9
Hypothesis 3 - Test for Consistency of Revenue..............................................................................10
Hypothesis 4 - Effect of Smart cities on inflow of tourists..............................................................11
Hypothesis 5 - Effect of Open-Sky policy on tourist using air transport...........................................13

Introduction
‘Atithi Devo Bhava’ means 'The guest is equivalent to God' is a Sanskrit verse, taken from an
ancient Hindu scripture which has influenced us to believe and treat the guests as god. India
is proudly known for its hospitality towards the guests. Now in today’s era where everything
is seen as a business opportunity, tourism industry has evolved as a business to earn from
the tourists by providing services.

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Talking about tourism, Tourism is recognized as a powerful engine for economic growth and
employment generation. The tourism sector is the largest service industry in the country, its
importance lies in being an instrument for economic development and employment
generation, particularly in the remote parts of the country. It has emerged as one of the key
drivers for growth among the service sector of India and is a significant source of foreign
exchange for the country and economic activity that helps local and host communities.

Well, tourism does have an impact on economic growth of the nation, but to have the
positive impact it must have diversity to be offered to the tourists.

Talking about the diversity of Indian tourism sector, it has following areas to offer:

Areas offered Number of sites in each area

World heritage sites 32
National parks 100+
Lakes 139
Waterfalls 100+
Protected monuments 3682
Beaches 100+ major Beaches
Medical tourism Available in 7+ states
Botanical gardens 29
Hill stations 280+
Gates 80
Zoos 21
Aquaria 19
Forts 225
Forests 23
Buddhist pilgrimage sites 29
Hindu pilgrimage sites 137
Mosques 25 Major Mosques
Rock-cut temples 138+
Wildlife sanctuaries 515
Rivers 25
Mountains 50 Major Mountains
Eco regions 162
Coral reefs 4

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 Stadiums 117

With such a diversified sector, offering thousands of options, we expect it to contribute in

the economic development of the nation.

The contribution has been in the number of Foreign Tourist Arrivals (FTAs) which has grown
steadily in the last three years reaching around 7.46 million during January–December 2014.
Foreign exchange earnings (FEEs) from tourism in terms of US dollar grew by 7.1 percent
during January-December 2014 as compared to 5.9 percent over the corresponding period
of 2013. FTAs during the month of December 2014 were ₹ 120,083 crore (US$ 19.02 billion)
as compared to FTAs of ₹ 107,671 crore (US$ 17.05 million) during January-December 2013
over the corresponding period of 2012. There has been a growth of 6.8 percent in
December 2014 over December 2013.

The Tourist Visa on Arrival (TVoA) scheme enabled by Electronic Travel Authorization (ETA),
launched by the Government of India on November 27, 2014 for 43 countries has led to a
growth of 1,214.9 percent recently.

The Indian government has realized the country’s potential in the tourism industry and has
taken several steps to make India a global tourism hub. The Government of India has set
aside ₹ 500 crores (US$ 79.17 million) for the first phase of the National Heritage City
Development and Augmentation Yojana (HRIDAY). The 12 cities in the first phase are
Varanasi, Amritsar, Ajmer, Mathura, Gaya, Kanchipuram, Vellankani, Badami, Amaravati,
Warangal, Puri and Dwarka.
The tourism industry is also looking forward to the E-visa scheme which is expected to
double the tourist inflow to India.

ICRA ltd rating agency expects the revenue growth of Indian hotel industry strengthening to
9-11 per cent in 2015-16.

India is projected to be number one for growth globally in the wellness tourism sector in the
next five years, clocking over 20 percent gains annually through 2017, according to a study
conducted by SRI International.

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Types of Variables Used
Most of the variables used here are Continuous variables are also known
as quantitative variables. Continuous variables can be further categorized as
either interval or ratio variables.
Categorical variables are also known as discrete or qualitative variables. Categorical
variables can be further categorized as either nominal, ordinal or dichotomous.

 Nominal variables are variables that have two or more categories, but which do not
have an intrinsic order. For example, a real estate agent could classify their types of
property into distinct categories such as houses, condos, co-ops or bungalows. So
"type of property" is a nominal variable with 4 categories called houses, condos, co-
ops and bungalows. Of note, the different categories of a nominal variable can also
be referred to as groups or levels of the nominal variable. Another example of a
nominal variable would be classifying where people live in the USA by state. In this
case there will be many more levels of the nominal variable (50 in fact).
 Dichotomous variables are nominal variables which have only two categories or
levels. For example, if we were looking at gender, we would most probably
categorize somebody as either "male" or "female". This is an example of a
dichotomous variable (and also a nominal variable). Another example might be if we
asked a person if they owned a mobile phone. Here, we may categorise mobile
phone ownership as either "Yes" or "No". In the real estate agent example, if type of
property had been classified as either residential or commercial then "type of
property" would be a dichotomous variable.
 Ordinal variables are variables that have two or more categories just like nominal
variables only the categories can also be ordered or ranked. So if you asked someone
if they liked the policies of the Democratic Party and they could answer either "Not
very much", "They are OK" or "Yes, a lot" then you have an ordinal variable. Why?
Because you have 3 categories, namely "Not very much", "They are OK" and "Yes, a
lot" and you can rank them from the most positive (Yes, a lot), to the middle
response (They are OK), to the least positive (Not very much). However, whilst we
can rank the levels, we cannot place a "value" to them; we cannot say that "They are
OK" is twice as positive as "Not very much" for example.
 Interval are variables for which their central characteristic is that they can be
measured along a continuum and they have a numerical value (for example,
temperature measured in degrees Celsius or Fahrenheit). So the difference between
20C and 30C is the same as 30C to 40C. However, temperature measured in degrees
Celsius or Fahrenheit is NOT a ratio variable.
 Ratio variables are interval variables, but with the added condition that 0 (zero) of
the measurement indicates that there is none of that variable. So, temperature
measured in degrees Celsius or Fahrenheit is not a ratio variable because 0C does
not mean there is no temperature. However, temperature measured in Kelvin is a
ratio variable as 0 Kelvin (often called absolute zero) indicates that there is no
temperature whatsoever. Other examples of ratio variables include height, mass,
distance and many more. The name "ratio" reflects the fact that you can use the

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 ratio of measurements. So, for example, a distance of ten metres is twice the
distance of 5 metres.

Variables used are as follows:

Variable used Type of variable
Month-wise Tourist Arrivals in India by Air continuous ratio
State-wise Number of Domestic Tourist Visits in India continuous ratio
Protected Monument in India continuous ratio
Selected State/Mega Project-wise Amount Sanctioned  continuous ratio
Month-wise Foreign Exchange Earnings (In ₹) from Tourism in India continuous ratio
Estimates of Fee Prepared by Ministry of Tourism (MOT) in India continuous ratio
Foreign Tourist Arrivals in India continuous ratio
Month-wise Tourist Arrivals at Major Airports (Foreigners) continuous ratio
Ranking categorical-ordinal
Nationality  categorical-Nominal
Tourism Receipts continuous ratio
Category-wise Number of Approved Hotels and Availability of Rooms in
continuous ratio
India

Methodology
The data were sourced from government websites and internet.
All the data were secondary. Variable used were no. of domestic tourist, no. of foreign
tourist. Our basic focus is on foreign investment from foreign tourist. Airport data was also
an important figure as that will basically cater to foreign tourist.

Foreign Exchange Earnings from Tourism in India

(1991 to 2015-upto June 2015)

Year ₹ in Crore % Change In US$ Million % Change

1991 43180 - 1861 -
1992 59510 37.8 2126 14.2
1993 66110 11.1 2124 -0.1
1994 71290 7.8 2272 7.0
1995 84300 18.2 2583 13.7
1996 10046 19.2 2832 9.6
1997 10511 4.6 2889 2.0
1998 12150 15.6 2948 2.0
1999 12951 6.6 3009 2.1
2000 15626 20.7 3460 15.0
2001 15083 -3.5 3198 -7.6
2002 15064 -0.1 3103 -3.0
2003 20729 37.6 4463 43.8
2004 27944 34.8 6170 38.2
2005 33123 18.5 7493 21.4
2006 39025 17.8 8634 15.2

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 2007 44360 13.7 10729 24.3
2008 50730 14.4 11832 10.3
2009  54960 8.3 11136 -5.9
2010# 64889 18.1 14193 27.5
2011# 77591 19.6 16564 16.7
2012# 94487 21.8 17737 7.1
2013# 105836 12.0 18133 2.2
2014 120083 11.5 19657 6.6
2015-upto June 60302 6.2 9609* 2.9

If we check this data we can find it is normally distributed.

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Hypothesis testing

Hypothesis 1 - Test of issue of utilization certificate

A state shall get utilization certificate if it can utilize more than 85% of the payment sanction
by centre. Haryana got fund from centre for 6 projects .What is the probability that Haryana
government will bag that certificate.
H0: P <= 85%
H1: P >= 85%

Nature of H1
Enter the Sample Assumed popn
Sample size (right, left or Test Statistic los Critical Values Decision
following info proportion proportion
2-tailed)

Proportion 0.8 0.85 4 right -0.2801 0.05 1.645 Accept H0

Nature of H1
Enter the Sample Assumed popn
Sample size (right, left or Test Statistic los Critical Values Decision
following info proportion proportion
2-tailed)

Proportion 0.8 0.85 4 right -0.2801 0.05 1.645 Accept H0

Decision: As critical value is greater than the value observed, the Null Hypothesis shall be
rejected. Therefore Haryana state will not receive utilization certificate.

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Hypothesis 2 - Test for finding if Centre is more biased towards AP

There is a claim from an investigation agency is that centre is more biased towards Andhra
Pradesh as compared to Madhya Pradesh i.e. mean amount released for AP is more
compared to MP(Data 13)
H0: Mean (AP) <= P (MP)
H1: Mean (AP) > P (MP)
Mean (AP) =1415
Mean (MP) =1192

  Variable
Variable 1 2
1192.71
Mean 1637.29 1
320934.758 898778.
Variance 1 1
Observations 7 7
0.58668908
Pearson Correlation 8
Hypothesized Mean Difference 0
Dof 6
0.94499585
t Stat 9
0.19057175
P(T<=t) one-tail 3
1.94318028
t Critical one-tail 1
0.38114350
P(T<=t) two-tail 6
2.44691185
t Critical two-tail 1  

Decision: As t statistical value < t critical value

pStat > p critical (.05)
We don’t have enough statistical evidence to reject H0 and hence the centre seems to be
biased towards AP.

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Hypothesis 3 - Test for Consistency of Revenue

It is believed that foreign tourists tend to tour more in January i.e. starting of a year
compared to middle of the year i.e. June. So the revenue generation during January is more
consistent as compared to June.
H0: S1 <= S2
H1: S1 >= S2

F-Test: Two Sample Variances

  Variable 1 Variable 2

Mean 5484.467 4043.667

Variance 13052220 7329573
Observations 15 15
Dof 14 14
F 1.780761
P(F<=f) one-tail 0.146087
F Critical one-tail 2.483726  

Decision: As per the test we can say that p value < 0.05. Hence we have enough statistical
evidence to reject H0. So revenues in January are more consistent than June, Government
should encourage more schemes in June.

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Hypothesis 4 - Effect of Smart cities on inflow of tourists

Centre assumed that introduction of smart cities will increase inflow of tourists. So statistics
department was given the task of framing evidence suggesting that improvement of IT
sector will increase inflow of tourists. So data will be compared from 2000-2014 where it
was observed that boom has occurred and whether it led to increase in inflow of tourists.
The following sample was taken-

Year Inflow of
tourists
2001 2537282
2002 2384364
2003 2726214
2004 3457477
2005 3918610
2006 4447167
2007 5081504
2008 5282603
2009 5167699
2010 5775692
2011 6309222
2012 6577745
2013 6967601
2014 7703386

In this problem, we are interested in testing whether or not there has been increase in the
mean inflow of tourists. In other words we would like to test whether mean tourist inflow
has increased beyond the population mean.
Null and alternative hypothesis are outlined below:
H0: Mean of 2000-2014 = Population mean
H1: Mean of 2000-2014 > Population mean
As the sample is small, we use t-statistic to test the hypothesis.
x́−µ
t=
σ
√n

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Here, x́=4881183, μ=2783625, σ =1741955 and n=15.
Therefore t=4.6636. This is a right tailed test. With 5% level of significance and degree of
freedom=14=15-1, we get critical value of t =1.761. We observe that the calculated value of
t falls in the rejection region.

Fig: Hypothesis test concerning the effect of IT on tourist inflow

Fig: Solution to hypothesis 5

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Decision: So we can see that we have enough statistical evidence to reject the null
hypothesis. Thus we can infer that with increase in IT infrastructure there is increase in
inflow of tourists. So government must invest on IT infrastructure.

Hypothesis 5 - Effect of Open-Sky policy on tourist using air transport

In 1990, April, the Government adopted Open-sky policy and allowed air taxi-operators to
operate flights from any airport, both on a charter and on a non-charter basis and to decide
their own flight schedules, cargo and passenger fares. East-West Airlines was the first
national private airline to operate in the country after almost 37 years. So does this change
of act increase the amount of tourist using air mode of travel

We first set up the null hypothesis that there is no significant difference between the
average air transport usages by tourist. That is,
H0: Mean of 1989-1990 = Mean of 1990-1991
H1: Mean of 1989-1990 < Mean of 1990-1991
It is a two-tailed test.
tobs= d/Sx/sqrt(N)
d= -4162.5
Sx= 17616
N= 12
t obs = -4162.5/17616/3.16
t obs = -3.162
t critical = 0.36461

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Decision: So, we have enough statistical evidence to reject null hypothesis
So we can state that inflow of tourists via have increased with above action of government

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