We have been there before?and recovered. But we have much more to lose now and much more to do?how well and how quickly can we therefore recover? This is the question because if there?s one thing clear amidst the chaos and tragedy of the terrorist attack on Mumbai it is that the killers and their backers want India to suffer the maximum damage in terms of perceptions about a safe place to do business in and with. That?s why South Mumbai?s best addresses were targeted. That?s why Westerners were targeted. That?s why the world is asking questions about India?s ability to cope with an attack that was evidently planned and executed with terrifyingly impressive eye to detail. India has been a victim of terrorism long before the ?war on terror? started. But the Mumbai attack is probably the first terrorist operation in India that?s globalised in its intended outcome. So beyond the enormously difficult task of securing Mumbai again, the most urgent official job will be to make sure the terrorists don?t get that result. One can live with cricket tournaments being cancelled, foreign airlines canceling flights and Western countries sending in special planes to evacuate their citizens as if Mumbai is a war zone. One can understand there?ll be an inevitable period of caution and fear. But our authorities have to understand that these first reactions can get compounded if Mumbai and India don?t quickly reappear on the global business map as destinations assessed only by economic parameters and potential. The stock market was shut today. And corporate India is understandably trying to cope as everyone else is with the enormity of the attack. But government, industry and market must be seen to be sending out the message of business as usual as soon as it is possible. There?s an additional imperative this time that didn?t apply when India suffered major terrorist attacks earlier: the country is in the middle of coping with an economic slowdown a large part of which is caused by anxieties being suffered by global capital.
There was never any doubt before these attacks that once the financial mood settled down, India would be a good place to do business. Indeed, carefully analysed data shows that foreign investors, even though they took out money as part of the great deleveraging process, are also taking bets on India. Asia?s third largest economy is a crucial element of the global response and recovery process. India?s economic fundamentals therefore need protection from the political risk magnification that the terrorists want to achieve. In the very short-term, the rest of the world?s political risk premium for India may unavoidably increase. That period of negative perception needs to be very short. India?s political and business leaders should know the world will be watching them as never before in terms of their capacity to marshal the strengths of a capitalist democracy against terrorists.
Revive spirits
It would be an understatement to say that domestic economic and financial confidence dented by recent reversals may get affected by the Mumbai attacks. The government, therefore, must be ready to step in to shore up domestic confidence and revive spirits. Heterodoxy is already the ruling mantra in economic management. The next few days will be critical in terms of both gauging what the mood is and whether special confidence boosters are needed. All economic authorities need to remember is that if there ever was a time that was not for hair-splitting, this is it.
Of course, politics as always will shape economics. The politics of terrorism has been despairingly unimaginative and tunnel-visioned for a long time. Maybe the shock of seeing South Mumbai being run over by terrorists will concentrate politicians? mind. If it doesn?t, political energy that should have been spent on economic management will get wasted on political catfights, especially with elections on. But elections give out a very strong message to politicians?India?s commercial capital was attacked the day its second largest state, Madhya Pradesh, went to polls and two days before India?s capital city votes; a few days later, there are elections in Rajasthan, a state targeted in an earlier round of terrorist violence and which has since recovered. In Jammu and Kashmir, terrorism?s favourite target, more than 60 per cent of voters have cast their ballots in two rounds, defying boycott calls from those whose political sympathies don?t necessarily align with the national interest. So the message from voters is clear. Clear, too, is the message coming out from India?s economic imperatives. Politics needs to hear that and act. India?s politics is capable of big responses to big challenges. There?s seldom been a bigger challenge.