Designing Innovative Regulation: Homestay Policy of Uttar Pradesh

Millions of pilgrims pour into Uttar Pradesh every year, drawn to some of the most sacred and storied ground in the country. On paper, it should be a tourism goldmine, but behind the numbers lies a strange paradox: a state overflowing with visitors and starving for revenue. The reason is hiding in plain sight. There were nowhere near enough rooms to hold them. Six times fewer beds than the national average, for a state pulling in one-sixth of the country’s tourists.

Big hotels take years and fortunes to build. The tourists keep coming faster than the infrastructure can. Someone has to fill the gap, and the answer might be sitting inside ordinary homes across the state.

But homestays are not the easy fix they appear to be. Elsewhere in India and around the world, this same idea has spiralled into unregistered properties, safety incidents, tax evasion, and cities eventually cracking down hard. Three overlapping, contradictory rulebooks already govern the sector in UP, confusing operators and regulators alike.

Now policymakers face a defining choice: tighten the old rules, loosen them further, or design something no one has quite built before.