Best of the Week: Is India losing its pull for foreign tourists?

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India’s tourism story is hitting a familiar speed bump—and it’s beginning to feel uncomfortably repetitive. After a strong post-pandemic rebound, foreign tourist arrivals (FTAs) are once again struggling to regain pre-covid momentum. In the first nine months of the year, arrivals fell 12% year-on-year to just 6.18 million, and the full-year tally is now expected to close at around 8.7-8.8 million—well below the 10.9 million recorded in 2019.

The reasons are not new. India continues to be seen as an expensive destination, infrastructure gaps persist, and concerns around safety still weigh on traveller sentiment. This year, though, a few additional shocks didn’t help. Political instability in Bangladesh—once India’s largest source market—has sharply reduced arrivals. The terrorist attack in Pahalgam, Jammu and Kashmir, dented confidence further, while flight disruptions due to IndiGo’s cancellations during the peak December travel season added to the woes.

What makes this slowdown more worrying is the contrast with Southeast Asia. Cheaper, easier-to-navigate destinations in the region are seeing a surge in foreign tourists, even as India struggles to keep pace.

There’s also a deeper structural issue. Nearly 45% of India’s foreign tourists come from just three countries—the US, Bangladesh and the UK. When one of these markets falters, the impact is immediate and visible. Diversification, clearly, remains overdue.

Perhaps the most telling gap is policy follow-through. Despite fierce global competition, the tourism ministry has spent only about a third of its allocated funds in recent years. Overseas promotion budgets have been slashed to almost nothing—just ₹3 crore this year—down from ₹300-450 crore before the pandemic. Read the detailed report by Nandita Venkatesan, Pragya Srivastava.

On to the best of Mint’s journalism from this week:

MGNREGA gets a makeover

The government has taken a step by passing the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill, 2025, in the Lok Sabha, setting the stage to replace the 20-year-old MGNREGA. The pitch? Rural India has changed—poverty has fallen, livelihoods have diversified, and it’s time the jobs scheme caught up. But states will now foot a much larger part of the bill. The Centre plans to fund 60% of costs (90% for northeastern and Himalayan states), moving away from MGNREGA’s fully Centre-funded wages. The bill promises 125 days of work, tighter digital monitoring, durable rural assets, and no overlap with peak farm seasons. Critics, however, fear a demand-driven right could turn into a budget-capped scheme.

Markets, music and a costly lesson

A stock market workshop with trumpets, Bollywood beats and dancing gurus? Only in India. But behind the celebration lies a sobering truth: in markets, someone always pays the bill. Sebi’s crackdown on finfluencer Avadhut Sathe—and earlier on global giant Jane Street—pulled back the curtain on a harsh reality. While markets dazzled on the surface, 91% of retail traders lost money in derivatives. Small investors danced to dreams of quick riches, while losses quietly piled up. Add stretched valuations, a narrow rally, bruised mid- and small-caps, and relentless global headwinds, and 2025 delivered a lesson: markets reward discipline, not drama.

Data centres vs. natural resources

India is racing ahead in the data centre game, with nearly $70 billion committed this year to build over 6GW of capacity. It sounds like a dream run for AI ambitions, but do we have the water and power to sustain it? Data centres guzzle energy and water, with a single large facility consuming as much water daily as a small city. In a country already facing water stress, that’s a red flag. Power, too, remains a challenge unless green capacity scales up faster. Can cleaner cooling tech and stricter regulation keep this boom sustainable?

When prices almost stood still

Inflation nearly vanished in October and November—0.25% and 0.71%, respectively—and shoppers felt it. Cheaper food helped, but the real spark came from sweeping goods and services tax (GST) cuts on nearly 400 items. Cars, two-wheelers, and consumer durables suddenly cost less, with some prices falling the fastest ever seen in the CPI basket. Sounds like a win, right? Maybe—but the effect is already fading. Economists say GST-led disinflation may be far smaller than first thought.

Who’s really getting a raise?

As appraisal season nears, India Inc. is sharpening its pencils—but not going overboard. Most companies are expected to offer hikes in the 8.5-9.5% range in 2026, much like this year. With inflation cooling and hiring still cautious, it remains an employer’s market, except in pockets like pharma and consumer goods. But new labour codes are quietly pushing up costs for companies and trimming take-home pay for employees. So even a “decent” hike may not feel that generous.

Why the Rupee is weak—and what could save it

The rupee flirted with a new low this week, briefly slipping past 91 to the dollar before the RBI’s quiet hand steadied it. Panic? Not really. This isn’t a current account blow-up—India’s external basics are solid. The real pressure is coming from capital outflows, muted FDI and jittery global sentiment. So what could help the rupee breathe easier? A revival in sticky foreign investments, stronger nominal GDP growth, a market comeback that draws global investors back, and—perhaps most crucially—clarity on a US-India trade deal. Until then, expect volatility, not crisis.

Stablecoins under scrutiny

Stablecoins are often pitched as crypto’s sensible cousin—steady, efficient, and practical. But the RBI isn’t buying the hype just yet. Speaking at Mint’s BFSI Conclave, deputy governor T. Rabi Sankar warned that these privately issued digital tokens carry risks India can’t ignore. Are they really money if there’s no sovereign backing? Could dollar-linked stablecoins quietly replace the rupee, weaken banks, or blunt monetary policy? With UPI already offering fast, cheap payments, the RBI sees little upside at home. Instead, it’s nudging India towards the digital rupee—programmable, regulated, and trusted.

India’s securities laws get a long-overdue overhaul

Too many rules, too many circulars, were India’s securities laws due for a cleanup? The government thinks so. Finance minister Nirmala Sitharaman has tabled the Securities Markets Code, 2025, folding three legacy laws into one sharper, clearer framework. The idea is to make regulation easier to follow, regulators more accountable, and investor grievance redressal faster. From tighter conflict-of-interest disclosures at Sebi to an eight-year cap on delayed probes, the bill tackles long-standing pain points. Add statutory backing for investor ombudsmen and Sebi’s regulatory sandbox, and you have a code aimed at trust, transparency and timely enforcement.

MUFG’s ₹39,600-crore signal on India’s lending future

Japan’s MUFG is investing ₹39,618 crore for a 20% stake in Shriram Finance—one of the largest cross-border transactions this year and a clear vote of confidence in India’s lending story. The market loved it, too, with Shriram Finance hitting a 52-week high. Why does this matter? The capital boost strengthens Shriram’s balance sheet, lowers funding costs and opens doors to tech and innovation synergies. For MUFG, it’s a strategic entry into India’s fast-growing MSME and retail credit space. Take a deep dive into India's second-largest non banking financial services company and see why Shriram Finance became Japan’s biggest bet in India yet.

When the state reacts too late

Drawing from a personal brush with IndiGo’s mass flight disruptions, T.C.A. Anant uses the episode to spotlight a deeper governance flaw: India’s habit of reacting after crises erupt. What looked like an airline mess, he argues, exposed “passive governance”—a system that waits for breakdowns instead of spotting early warning signs. Despite abundant data on staffing, flight logs and even social media chatter, regulators seemed blindsided. Why weren’t the signals acted upon? Anant suggests India’s regulators still see their role as rule enforcers, not risk forecasters. The result: delayed action, avoidable economic costs and a state more comfortable firefighting than preventing fires.

That's all for this week. I hope you have a pleasant weekend!

If you have feedback, want to discuss food, movies and shows, or have anything else to say about our journalism, write to me at shravani.sinha@livemint.com or reply to this email. You can also write to feedback@livemint.com.

Best,

Shravani Sinha

Senior Correspondent