Faith-led infrastructure powers Ayodhya’s economic turnaround: IIM Lucknow study

People attending the dhwajarohan ceremony at the Ram Temple in Ayodhya. (Courtesy: PTI photo)

The consecration of the Ram Temple has re-rated Ayodhya’s economic prospects, triggering a surge in tourism-led demand, private investment and job creation, according to a detailed case study by Indian Institute of Management Lucknow. The study says faith-led infrastructure has emerged as a durable growth lever, helping the temple town pivot from a low-capacity pilgrimage economy to a high-footfall tourism hub.

Titled 'The Economic Renaissance of Ayodhya', a case study of Sri Ram Mandir, the report has been authored by Venkataramanaiah Saddikuti, Professor of Operations and Supply Chain Management at IIM Lucknow, KV Raju, Professor Emeritus at Chanakya University and economic advisor to the Uttar Pradesh government, and Gopika Varma of Indian Institute of Management Rohtak. It compares Ayodhya’s economic base before and after the January 2024 consecration and credits sustained policy support and infrastructure investment for the step change.

“The scale of the economic turnaround surprised us. When we began the study, we did not anticipate such a sharp enrichment of the region. The temple has acted as a catalyst, and infrastructure has converted footfall into sustained economic activity,” professor Saddikuti told Moneycontrol. “This is not a one-off spike. We are seeing repeat visitation, longer stays and higher spend per visitor, which is what makes the model durable,” he added.

He said the Ayodhya Sri Ram Temple has evolved into more than a religious site and is shaping India’s emerging “temple economy” playbook, similar to the redevelopment-led tourism push seen around Kashi Vishwanath Mandir in Varanasi and the Mahakal temple in Ujjain. “If connectivity, crowd management and last-mile services keep pace, Ayodhya can anchor a multi-city spiritual tourism circuit with measurable economic spillovers,” he said.

Before the consecration, Ayodhya’s economy was centred on small-scale pilgrimage activity, with limited hospitality capacity, weak air connectivity and modest organised retail presence. Visitor inflows were muted, organised hotel chains had negligible presence and employment opportunities were constrained, contributing to outward migration.

Post-January 2024, the study estimates more than 110 million devotees visited Ayodhya in the first six months, lifting demand across retail, transport and hospitality. Annual footfall is projected at 50 to 60 million, placing Ayodhya among the country’s leading religious tourism destinations. Redevelopment and capacity creation projects worth about Rs 85,000 crore are underway across roads, rail infrastructure, urban renewal and airport expansion, crowding in private investment.

Tourism-led activity is projected to generate Rs 20,000 to Rs 25,000 crore in tax revenues over the medium term, while job creation across hospitality, construction, transport and services has expanded. The study estimates Uttar Pradesh’s tourism spending to cross Rs 4 lakh crore, with Ayodhya contributing a material share of incremental growth. The city is also emerging as a national and international spiritual tourism hub, attracting overseas visitors and researchers alongside domestic pilgrims.

Between February 5, 2020 and February 5, 2025, the Ram Temple Trust remitted around Rs 400 crore in taxes, including about Rs 270 crore in GST and Rs 130 crore across other categories, the authors said. “These tax flows indicate that religious infrastructure can be fiscally meaningful when paired with formalisation and compliance,” the report said.

Industry body Confederation of All India Traders estimates that business activity linked to the consecration exceeded Rs 1 lakh crore nationwide, with Ayodhya contributing a significant share. Daily footfall of over 200,000 pilgrims has supported sustained demand across hospitality and allied services. More than 150 new hotels and homestays have come up, while major hotel chains including Taj Hotels, Marriott International and Wyndham Hotels & Resorts have announced expansion plans. Online travel platforms have reported up to fourfold growth in bookings for Ayodhya.

Sunil Tripathi, a government-trained tour guide based in Varanasi, said the demand ripple is visible beyond Ayodhya. “Pilgrims are stitching together Ayodhya and Varanasi trips. Higher volumes mean steadier work through the year, not just in peak months,” he said. “Guides, drivers and small eateries are seeing more predictable incomes now.”

The report also highlights a pickup in local enterprise creation, with around 6,000 micro, small and medium enterprises newly set up or reactivated in and around Ayodhya. Over the next four to five years, tourism-led growth is expected to generate about 120,000 direct and indirect jobs. Small retailers and street vendors report higher daily earnings, while real estate prices around the temple precinct have risen sharply, drawing investor interest from outside the region.

“Demand in hospitality has surged, driving new hotels, homestays and guesthouses. Infrastructure projects are creating construction and service jobs, while higher commercial activity is strengthening state revenues,” the report said. It adds that Ayodhya’s experience shows how faith-led infrastructure, backed by coordinated policy support and long-term planning, can catalyse regional growth, crowd in private capital and create large-scale employment across allied sectors.