COVID-19 Pandemic Fear and Economic Performance: Empirical Analysis of Tourism and Growth in India

The COVID-19 pandemic generated unprecedented disruptions to the global tourism industry, severely affecting tourism-dependent economies and related employment. India, as one of the world’s major tourist destinations, experienced substantial declines in tourist arrivals during the pandemic period. This study investigates the effects of COVID-19-induced fear on tourism demand and economic performance in India using the COVID-19 Fear Index, which captures behavioural responses to pandemic-related uncertainty beyond conventional indicators such as infection rates, mortality, and lockdown restrictions. The COVID-19 Fear Index is constructed using reported COVID-19 cases and mortality data sourced from the European Centre for Disease Prevention and Control and the Johns Hopkins Coronavirus Resource Centre. Monthly data from January 2020 to October 2023 are analysed using autoregressive distributed lag (ARDL) and nonlinear autoregressive distributed lag (NARDL) models to examine both tourism demand dynamics and the asymmetric tourism–growth relationship. The results confirm a stable long-run cointegration relationship among tourism demand, the COVID-19 Fear Index, exchange rate, and ICT development. Pandemic-induced fear significantly reduces tourism demand in the long run (−0.152, p=0.021) and short run (−0.084, p=0.000), indicating that heightened uncertainty suppresses tourist arrivals. Exchange rate depreciation also negatively affects tourism demand (−0.267, p=0.000), whereas ICT development positively enhances tourism resilience (0.463, p=0.000). The error correction term (−0.436, p=0.000) confirms rapid adjustment toward long-run equilibrium. Furthermore, the nonlinear analysis reveals asymmetric effects, where positive tourism shocks increase economic growth by 0.088% (p=0.003), while negative shocks exert a stronger contractionary effect (0.409, p=0.000). These findings highlight the vulnerability of tourism-dependent economies to uncertainty shocks and emphasise the importance of ICT-driven resilience strategies, adaptive tourism policies, and crisis-responsive economic planning.