How does terrorism effects the finance of

India ??
All terrorist acts involve violence or the threat of violence. These violent acts are usually committed by nongovernmental groups or individuals who are either part of or officially serving in the military, law enforcement agencies, intelligence agencies, or other governmental agencies of an established nation. Terrorists attempt not only to create panic but also to weaken confidence in the government and the political leadership of the target country. Many believe that terrorism can't hamper ones economic activity as it only destroy a small fraction of the stock of capital of a country. However, a broader look at the geo-political & economical scenario can easily erode this misconception. India has been facing the terrorism threat as long as since 1970. Terrorism in India is primarily attributable to Islamic, Naxalite and various other radical movements. At least 232 of the countrys 608 districts were afflicted, at differing intensities, by terrorism. Over a period of time terrorism has severely affected Indian economy. Following are the issues that had been major hindrance for Indian economic growth: A] SHORT-TERM IMPACT 1) Loss of Human Capital The human costs have been horrendous. Estimates are in past 5 years 5000+ were killed in terrorist attacks. This puts India next to Iraq both in terror deaths and terror incidents 2) Investor Behavior Frequent attacks on commercial & government institutions shatter the confidence of the investors causing heavy investment drainage. One example of the same is the terrorist attack in front Delhi high court, which internationally provoked insecurity & discouraged the investors (FII's & FDI's), obstructing the economic growth. A heavy impact of this can be observed at the stock market that keep diving down post any major terrorist event. 3) Short Term Financial Loss Loss suffered due to the diversion of business away from the city to other locations, lost earnings of public due to disability and trauma among survivors etc. drains out the productivity levels & impact the respective economy adversely. 4) Retrenchment effect on Specific Industries The Jaipur serial blasts, J&K Terrorism & Mumbai 26/11 attacks did have immediate and concentrated impacts on a number of industries: most notably, airlines, aerospace, travel, tourism, insurance, lodging, restaurants, recreation and related activities. Gross earnings from foreign tourists are currently around 1% of GDP. B) LONG-TERM IMPACT

1) Political Instability The assassinations of 2 Ex-PM of India, Mrs. Indira Gandhi, Mr. Rajeev Gandhi already had jolted Indian politics & economy at large. India had lost 2 of its strongest pillars which otherwise would have taken Indian politics, Business & industry at unimaginable heights. The siege of South Mumbai has taken toll as home minister Shivraj Patil, Chief minister Vilasrao Deshmukh & Home minister R.R. Patil had to resign. This further unstabilized the Indian industry from a long-term perspective. The Political instability at times have also let to erosion of FII's & FDI's. 2) Global Implications India, post Kargil war then Attack on Parliament , 26/11and recent attack has lost millions of business as the trade link between the two countries are frozen during such period. Agri-Exporters in bordering states have taken heavy burns. This has resulted in unemployment in these regions, which in turn again triggers riots. 26/11 Attack involved foreign hostages and places where business leaders, executives and foreigners frequented. This will lead to a drop in investments. 3) Long Term Financial Loss The direct economic damage done by terrorist attacks: buildings and infrastructure destroyed, productive lives ended. Another form of longer-term costs security involves the opportunity cost of spending additional money to fight terrorism. Terrorists says "bleed India through thousand cuts". Even if terrorism represents a small fraction of the overall economic risk in India, it may have a large impact on the allocation of productive capital across the country. In any part of the world terrorism is unwanted as it not only kills the human life but also the infrastructure, industry ultimately shackling its overall growth. The threat of future terrorism, both in terms of quantity and intensity, more likely than not, is going to be a negative factor weighing on Indias long-term growth

By- ARPO MUKHERJEE MBA (power management), 1st sem