I know this is a bit insensitive?, a well-known anchor of a leading business news channel asked a Mumbai-based industrialist less than an hour after the blasts on Wednesday, ?but will this have an impact on growth?? The industrialist was a bit upset about the timing of the question, and indicated as much before talking about how the much-vaunted ?spirit? of Mumbai would ensure that commerce would prevail.

The anchor should have spoken to Arthur de Montalembert, the head of the Indian operations of French nuclear reactor giant Areva. Arthur and his wife spent the evening of November 26, 2008, outside the Taj Mahal hotel. Not as curious bystanders, but as concerned parents. Their daughter was trapped in the hotel, so based on the gunfire they could hear and the explosions/fire they could see, the two guided her on where she should run from, on where she should go so that the firemen could rescue her. Once their daughter was rescued, along with another colleague?s wife who was also trapped in the hotel, Montalembert put it behind him and went back to what he did best: negotiate with the Indian government to sell nuclear power plants.

So it?s not just the spirit of the Mumbaikars, it?s true of many others. Indeed, as the clutch of data put out by some newspapers, including FE, on Thursday showed, the Sensex has bounced back after most terrorist attacks. Look at the data on investment, whether Indian or foreign, or on economic growth, and the story is the same one of resilience.

Nor, by the way, is that true only of India. On our oped page today, we have a summary of several academic papers on the impact of terror attacks on various aspects of economic growth and the result is by and large the same: terror attacks can?t stop a nation. One study (http://jpr.sagepub.com/content/48/3/355.full) on the impact of terror in 51 African countries from 1970-2007 found that while terrorism raised the cost of doing business including higher insurance premia, ?a country with a population of 50 million would have to experience 50 transnational terrorist incidents in a given year to have its income per capita growth rate decline by 1%.?

Another study, by a Harvard professor (http://www.hks.harvard.edu/fs/aabadie/ twe.pdf) uses a different set of data and finds that ?on average, a standard deviation increase in the terrorist risk is associated with a fall in the net foreign direct investment position of about 5 percent of GDP??it defines a one standard deviation as roughly the difference in terrorist risk between Italy and the US (the latter being more risky). So, the impact is higher in countries that have a high share of foreign investment (which clearly isn?t the case for India). Other studies found that, for instance, the September 11 attack resulted in a loss of 0.3% of US GDP. The authors find a larger impact when terrorism is sustained over long periods of time, a point made by another study (http://www.transnationalterrorism.eu/tekst/publications/WP5%20Del%209.pdf) as well. ?Empirical data suggests,? the study says, ?that single terrorist attacks affect a macro economy in the direct aftermath only. The effects thus remain short-lived and stand in contrast to the impact of campaign terrorism which?in the case of consistent and longer periods of terrorism?can affect GDP growth by up to 10% in approximately 20 years?.

The larger point, from the point of the human impact, is the adequacy of government response?is the government doing enough to prevent terrorist activity, and questions like that. While the smart response from the Union home ministry (the quick sending of NSG teams and forensic experts as well as the decision to have a two-hourly bulletin) as well as the Maharashtra government earned a lot of goodwill, the obvious questions about intelligence failure have come up. Most attribute this to not having enough feet on the street, and certainly the broad numbers suggest this to be true, not just of the police, but of judges as well?indeed, look at any parameter you can think of, doctors or nurses, and the result is the same. When he was an Express columnist, P Chidambaram cited World Bank figures to say that while the average Asian country has 2.6 civil servants per 100 people (the OECD average is 7.7), the figure for India is just 1.4. As many as 93% of government employees, Chidambaram wrote, are support staff, ?they fetch and carry for the Class I and Class II officers?.

In the case of the police, India has about 134 policemen per lakh population?the OECD average is around 400. Once you factor in the vastly superior technology available to these forces, their levels of education, as well as the vastly lower population densities they have to deal with, the comparison becomes even more unfavourable. Indeed, as data from for the Bureau of Police Research and Development (http://bprd.nic.in) shows, things have got worse over the years. While this ratio was 145 in 1998, it fell to 134 in 2008, the latest year for which data is available. Each policeman is supposed to service an area of 1.54 sq km, but thanks to a huge number of posts being vacant, this number is more like 2.04 sq km. A little caveat is in order here: the numbers for Mumbai and Delhi are around the OECD average of 400 policemen per lakh population. Even if you take into account the lower levels of technology available, there?s a clear problem that needs examining. Even between Delhi and Mumbai, Mumbai is terror-prone?does this have something to do with the stories of the links between the police and the underworld?

Once the immediate shock of the blasts is over, and it will be sooner than you think, these are the questions the government will need to tackle.

sunil.jain@expressindia.com