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India has been a victim of terrorism for the past 2 decades, but on 26th Nov 2008, they saw a different kind of terrorism. Terrorism at its worst, the one akin to the 9/11 attacks on US.

Are we witnessing a different kind of terrorism which can have an impact on our economy?

Earlier this year our National Security Advisor had issued warnings to the SEBI, stating that the Militant organizations have slowly moved towards a different dimension of terrorism which will cripple our Economic Environment.

This will also include raising money through different investment venues to fund these terror attacks. Today at Mumbai we see a different kind of terror activity that could have an impact on the economy which is already been hit by the global credit crunch.

The current terrorist attack is different from the other attacks as they have been trying to target high-profile areas and also on tourists of the western origin trying to make the impact of this attack to be felt globally. Some analysts feel that this attack has also been targeted on the Tourism industry which has been doing reasonably well despite the global credit crisis.

The impact of terrorist attacks on our economy has already been seen with instances like these:

• Hong Kong-based Political & Economic Risk Consultancy Ltd. rates India as the riskiest of 14 Asian countries, not including Pakistan and Afghanistan, it analyzed for the coming year because the deaths on account of Terrorism in India has been second only to Iraq.
• Last year despite the terrorist strikes because of the growing economy the FIIs had invested around $ 17 Billion in India, but this year they have removed around $12 Billion from the market already pulling down the market by more than 50%.
• Also many investment houses have decided to go slow on investments in India for the short term till they see any kind of let down in the terrorist activity in India. This will entirely depend on the tough measures taken up by government.
• Travel advisories being issued by countries to their respective citizens to avoid cities like Mumbai in wake of these terror attacks.

To reduce the impact on the economy the government has to take to take drastic measures that will induce some kind of confidence in the investors. Knowing the very finicky nature of the investors the government has to do something.

What do you suggest ?

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