Indian business leaders expressed widespread fears that the terrorist attack in Mumbai will dent confidence in India's economy which is already reeling from a huge withdrawal of foreign funds from its formerly booming stock market.
According to an AFP report, India opened its exchanges on Friday after authorities had shut down the stock, bond and foreign exchanges on Thursday as Indian troops surrounded the Taj Mahal and Oberoi Trident hotels that had been invaded by gunmen with automatic weapons and grenades.
According to market analysts, economists and business people in Sri Lanka, there could be severe ramifications on India's economy due to the attacks and the fallout could also have some effect on Sri Lanka, particularly in terms of tourism here which has been experiencing a downturn over the past few months.
A Reuters report said the militant attacks seemed to be aimed at crippling India's ability to draw foreign investment. Mumbai, a city of 18 million, is the nerve-center of India's growing economy and home to the 'Bollywood' film industry. Mumbai is also one of the world's top 10 commercial centres and accounts for 25% of the industrial output, 40% of maritime trade and 70% of capital transactions in the Indian economy. On Friday, the Bombay Stock Exchange (BSE) benchmark 30-share Sensex was down 126.1 points at 8,900.61 in early dealings. "These attacks will dampen sentiment. The markets could see lackluster trade initially," said Atul Mehra, head of capital markets with J M. Financial, quoted in an AFP dispatch.
Former Chairman of the Ceylon National Chamber of Industries A.K. Ratnarajah said the Mumbai attacks will have repercussions not only for India but for Sri Lanka as well. India is Sri Lanka's largest source of imports and he believes the attacks will negatively impact them. Any sort of instability in India will most likely have consequences for Sri Lanka.
Mr. Ratnarajah described the attacks as a tragedy but these types of attacks are happening all over the world in countries such as Thailand, Pakistan and Sri Lanka. "There is some sort of problem or the other everywhere. India has been having more frequent attacks now but Mumbai being the financial capital, it will have a slowing down of their economy and will affect Sri Lanka."
Chairman of the Sri Lanka Tourism Promotions Bureau Renton De Alwis said tourism will be impacted in the region in the short term because tourists generally think of a region as well, not only a destination.
"When there are problems in the region, it impacts on all destinations," he said. "People also have a short memory and they know that all places are impacted by terrorism so the impact will not be felt in the long term." He added that Sri Lanka should support its industry colleagues in India in overcoming the crisis.
Mr. De Alwis said it is important to see what precautions India will take. "Terrorism is a global phenomenon and to get rid of it, we have to generate much more understanding between people, races and believers of different ideologies and it is very important to build trust among people." An economist said he does not believe there will be any economic ramifications for Sri Lanka due to these events because attacks like this happen once in awhile and the region is not a stranger to terrorism. However, he too felt that tourism might be affected regionally.
Market analysts said the events in Mumbai will not have an impact on the Sri Lankan markets. "Markets are influenced by other things but looking at India's stock markets over the past year, people have been pulling out money." One analyst added that people are still confident of India's long term growth prospects but the terrorist attacks will serve to remind people of the risk of investing in countries in the region.
|
E-mail