India Inc and financial experts on Thursday said there could be a short-term negative impact on the currency and stock exchange as well as a slowdown in tourist arrivals but that such effects would recede with time if there were no further terror attacks. The US, Britain and Australia have already advised their citizens to defer travel to India’s commercial capital till further notice.

Global ratings agency Standard & Poor’s said it does not believe the Mumbai attacks should affect India’s sovereign rating providing they are an isolated case. “Based on the scenario that these attacks were an isolated case, we don’t expect there would be negative implications on India’s macro economic activities or the government’s fiscal position,” credit analyst Takahira Ogawa said in a statement. The BSE Sensex had ended up 331 points at 9,026.72 on Wednesday while the rupee ended at 49.48-50 per dollar. Both the BSE and the NSE were closed on Thursday as the security personnel continued with their efforts to nab the terrorists.

The financial system is unlikely to face any problem, bankers said. “I don’t see any impact of the terror attacks on our bank,” Union Bank of India Chairman M V Nair said. ICICI Bank managing director and CII president KV Kamath said while the city had a track record of bouncing back, “this is new type

of attack and I am sure the city has to adjust to this attack.”

A section of India Inc said the attacks will hit the sentiment. Said Kiran Mazumdar Shaw, chairman and MD, Biocon, “The Mumbai incident will definitely affect business in India. It has shattered the business confidence for sure. India was so far considered a safe haven for businesses and now the terrorists have hit at the heart of our business centre.”

... contd.