Temple as an Economic Multiplier: The Ayodhya Template

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Processor Intelligence Unit

On January 5, the National Real Estate Development Council (NAREDCO) President G Hari Babu said that the industry body will hold its general council meeting in Ayodhya.

NAREDCO’s President said that its members will visit Ayodhya to see the infrastructure developments in the historic temple city. “We would like to develop housing and commercial projects in Ayodhya,” Hari Babu said.

Hari Babu’s comments came exactly a week after Prime Minister Narendra Modi inaugurated the newly built Ayodhya Airport, renamed as Maharishi Valmiki International Airport, and the renovated Ayodhya Dham railway station, ahead of the Ram Temple’s `pran pratistha’ on January 22, 2024.

Ayodhya is going through an infrastructure reset with roads, airports, highways, hotels and hospitality infrastructure as the holy city readies itself to host millions of anticipated pilgrims from across India and the world.

Ayodhya in 2024 and beyond, many believe, could well evolve into a live template of a textbook economic multiplier model triggered by a temple town. There is demonstrable evidence of the multiplier potential of India’s temple economy.

A survey carried out by the National Sample Survey Organisation (NSSO) estimates that the temple economy is worth Rs 3.02 lakh crores and 2.32 per cent of the GDP. The NSSO figures suggest that 55 per cent of Hindus undertake religious pilgrimages patronizing mid and small-sized hotels.  Expenses on religious travel are Rs 2,717 per day/person, expenses on social travel, Rs 1,068 per day/person, and expenditure on educational travel, Rs 2,286 per day/person. That comes to expenditure on religious travel of Rs 1,316 crore per day.

The actual figures may be much larger.

“In some ways, the development of tourism-rich economic zones, along pilgrim trails, stems from extensive research that has shown that shrines were important economic hubs throughout Indian history”, Burton Stein of the University of Minnesota wrote a seminal paper on this in 1960 called ‘The Economic Function of a Medieval South Indian Temple’, which was published in The Journal of Asian Studies.

Ayodhya Needed a Big Push

The map of Uttar Pradesh, India’s most populous and also politically the most important state, looks strikingly similar to a bull leaping to charge. There are 75 districts, when seen on the map, makes for an interesting socio-economic reading.

Lalitpur in south-central and Sonbhadra in the southeast, jut into neighbouring states, like hooves running for take-off, are also among the poorest. On the north-western side lies Gautam Budh Nagar, a relatively smaller district in terms of geographical size, which is the most bullish.

Sample this:

In 2021-22, the latest year for which data is available, Gautam Budh Nagar’s district gross domestic product (DGDP) in current prices stood at Rs 143623.22 crore, accounting for almost nine per cent of the state’s GDP of Rs 1661313.08 crore.

This is not difficult to comprehend. Gautam Buddha Nagar has Noida and Greater Noida, Uttar Pradesh’s showpiece cities that seamlessly integrate with the national capital, dotted with high-street malls, glitzy corporate towers, and acres and acres of residential complexes. The Taj Expressway, connecting Delhi with Agra, runs right through the district.

The state’s capital Lucknow, is at a distant second, with DGDP of Rs 65115.46 crore, less than half of Gautam Budh Nagar.

At approximately 135 km from Lucknow, 200 km from Varanasi (DGDP of Rs 28218.35 crore), 170 km from Prayagraj (DGDP of Rs54418.45 crore), 134 km from Gorakhpur (DGDP of Rs 30522.76 crore), and about 636 km from Delhi and Gautam Budh Nagar, stands Ayodhya with a DGDP of Rs 16151.69 crore.

Ayodhya ranks 39^th in terms of DGDP among Uttar Pradesh’s 75 districts, not really an enviable position to be in.

Temple Elevator

It clearly needs to take a super-fast elevator to catch up within the state. Can the Ram Temple be the vehicle for this?

According to a 2021 Pew Research report, for many Hindus in India, national identity, religion and language are closely connected. Nearly two-thirds of Hindus (64%) say it is very important to be Hindu to be truly Indian. Among Hindus who say it is very important to be Hindu to be truly Indian, 80% also say it is very important to speak Hindi to be truly Indian.

Most Hindus in India say being Hindu, being able to speak Hindi are very important to be ‘truly’ Indian

Hindus who strongly link Hindu and Indian identities express a keen desire for religious segregation. For instance, 76% of Hindus who say being Hindu is very important to being truly Indian feel it is very important to stop Hindu women from marrying into another religion. By comparison, 52% of Hindus who place less importance on Hinduism’s role in Indian identity hold this view about religious intermarriage.

Moreover, Hindus in the Northern (69%) and Central (83%) parts of the country are much more likely than those in the South (42%) to strongly link Hindu identity with national identity. Together, the Northern and Central regions cover the country’s “Hindi belt,” where Hindi, one of dozens of languages spoken in India, is most prevalent. The vast majority of Hindus in these regions strongly link Indian identity with being able to speak Hindi.

Among Hindus, views of national identity go hand-in-hand with politics. Support for the ruling Bharatiya Janata Party (BJP) is greater among Hindus who closely associate their religious identity and the Hindi language with being truly Indian.

Ayodhya right being a central area of the “Hindi belt” stands to gain economically as the temple will likely draw millions to the city.

The policy of focusing on capital expenditure, and relying heavily on the Keynesian principle that higher public investment in infrastructure projects such as the airport, railway station and roads and highways leading will unleash strong economic multipliers in Ayodhya.

Such projects, but can spin jobs, with cascading benefits on intermediate industries, such as cement and steel as also trigger a cycle of private sector investment, or what economists sometimes describe as the “crowding in” phenomenon.

This hypothesis seems to be at play in Ayodhya. Phase 1 of the state-of-the-art airport has been developed at a cost of more than Rs 1450 crore. The airport’s terminal building has an area of 6500 sqm, equipped to serve about 10 lakh (1 million) passengers annually, now and later expanded to serve 60 lakh (six million) passengers annually.

This has been done clearly in anticipation that the airport will improve connectivity in the region, leading to a boost in tourism, business activities and employment opportunities.

Ayodhya’s current population is 3.5 lakh. It is not about the current population. The city is preparing itself to handle five to 10 times the current floating population annually. That will require urbanisation and expansion of the scale similar to the national capital region (NCR).

Shri Ram Mandir Construction Committee Chairperson Nripendra Mishra said areas surrounding Ayodhya will witness a surge in economic activities after the inauguration of the Ram temple and the city may undergo expansion similar to the National Capital Region (NCR).

"As money flows in, people will have many opportunities, and along with these opportunities, there will be increased investments in the area. We have received 16 applications for building hotels, and a plan for a smart city is also in progress," he said. "One day, it might be necessary to expand Ayodhya just like the national capital region of Delhi."

There are signs that this is happening. The urgency and interest of investors, hoteliers, and business owners, along with trends in property prices are definitive markers.

Local property dealers say that most plots of land available in Ayodhya have been bought out. Data from Ayodhya’s Stamp and Registration Department shows that in 2018-19, around 9,000 properties were sold till November. In 2023, the corresponding figure has more than doubled. Till November, 20,067 properties have been sold this year, data shows.

The revenue generated by the department has jumped to Rs 156 crore till November 2023, from around Rs 100 crore in 2018-19. The Department’s revenue receipt for November in terms of per cent hike was 109 per cent – the highest in the State.

There are 73 new hotels in the pipeline, of which 40 are already under construction. Radisson is the first international brand to open its hotel in Ayodhya. It has built an 80-room property and bookings have opened from January 1. Indian Hotels, which operates the Taj Hotels chain, is also building two hotels in Ayodhya; one with 100 rooms and another with 120 rooms. Both hotels are expected to start business in three years.

These rooms clearly wouldn’t suffice. About 500 homes with 2,500 rooms for homestays have been approved so far, meaning those with existing properties will get an opportunity to ride the pilgrim boom in Ayodhya.

Redevelopment of Ayodhya as per Master Plan 2031 will be completed over 10 years with an investment of over Rs 85,000 crore to upgrade the holy city to meet the requirement of a daily footfall of around 3 lakh after the inauguration of the Ram Temple this month, according to the Times of India.

The Master Plan 2031 aims to promote the holistic growth of the city. It is expected that more than fifty crore tourists will visit Ayodhya in the next five years.

The completion of these projects will take more than a decade. With an investment of around Rs 2,180 crore and Rs 300 crore, a Greenfield township and the Vashishtha Kunj Residential Scheme will be developed in the city, respectively.

The state government has also prepared a vision document for Ayodhya to create four lakh direct jobs and eight lakh indirect jobs in the city. The Ramayana Spiritual Theme Park on 2,300 acres, a tourism facility center, and an international museum are also a part of it. In addition, Sri Ram Janmabhoomi Tirth Kshetra Trust executing Sri Ram Mandir plans to construct world-class pilgrimage projects such as the ‘Ramayan campus’ in 500 to 1,000 acres with miniature forms of Ayodhya, Janakpur, Dandakaranya forest, Lanka, river Ganga, and even sea. According to the trust, devotees will get a feel of the Ramayana era when they visit the campus.

The Economic Times has reported that the city, after the full completion of the Ram Mandir and redevelopment, is likely to have a 1:10 ratio of residents and tourists. A total of 37 state and national agencies are already working in tandem to give a new look and feel to the city budget of Rs 31,662 crore. While NHAI is executing projects worth Rs 10,000 crore, the public works department of UP government has also taken up 34 projects worth close to Rs 7,500 crore. Airport, railways and highways are key parts of this upgrade.

According to the Confederation of All India Traders, the temple project has also opened doors for substantial business opportunities nationwide. Praveen Khandelwal, the Secretary General of CAIT, said the “economic impact of Ram Mandir is expected to surpass 50,000 crores”.

The demand for various items associated with worship, such as Shri Ram Mandir models has become a centre for attraction. These models are available in different sizes. On the other hand, idols, pictures, and artefacts related to Ram Mandir and other deities have seen a considerable surge.

According to Khandelwal there is also a substantial market demand for various items used in worship, such as clay, brass, and other metal lamps, single lamps, and multi-lamp holders for Aarti, as well as incense stick stands.

Additionally, there is a significant market presence of various items like incense sticks, dhoop (incense), cow dung cakes, scented cups, loban (gum resin), camphor, kumkum (vermilion), sandalwood, roli (vermilion powder), akshata (rice grains used in rituals), and candles made from cotton, along with Ganga water, all of which are highly favored by customers. There is also a high demand in the market for accessories used in worship, such as mats, rugs, sheets, and fabrics made from jute and other materials.

Besides, for FMCG and retail services companies the potential that floating population of this magnitude brings about can never be overemphasised. From personal toiletries to food items, from packaged water to café chains, the footfalls are where the market is.

Don’t be surprised to see coffee chains proudly proclaiming their presence in Ayodhya, soon. And with all the hotel rooms coming up, Ayodhya can well turn out to be a hot MICE (meetings, incentives, conferences, and exhibitions) destination.