The terrorist siege in southern Mumbai, not far from its financial district, is likely to threaten India’s already murky economic future and thwart plans to transform the city into a regional financial center, economists and investors said.
By HEATHER TIMMONS and KEITH BRADSHER
The New York Times
India’s economy had already been slowing significantly, because of the global credit crunch and the rupee’s decline. The country’s leading stock market index, the Sensex, has been cut in half since January as foreign investors redirected billions of dollars out of the country. Real estate markets around the country are cooling off.
Now foreign investors and business executives, who fueled much of India’s blistering growth over the past three years, are expected to be even more cautious about investing in India, at least in the short run, analysts said. Local companies and executives, who have already put the brakes on growth projections, could revise them further.
“Of course there will be some setbacks” related to the attacks, said Hitesh Kuvelkar, associate director at First Global, a financial research firm. Even before the attacks, First Global predicted that India’s economic growth could slow to about 6 percent in 2009 and less than 4 percent in 2010.
The attacks, which left more than 150 people dead by Friday evening, made targets of foreigners, witnesses said. The heavily armed terrorists were able to bypass security at two of India’s most expensive hotels, and it has taken India’s military several days to quell the violence, raising questions about safety in even the most exclusive locations.
It may be some time before the hotels, the Taj Mahal Palace and Tower and the Oberoi, once regular haunts for executives, become deal-making hubs again. “I would not feel comfortable either staying in or going to meetings at the Taj or the Oberoi, at least in the near future,” said Joel Perlman, the president of Copal Partners, a research company.