International
India Returning To Normalcy
Ruth David, 07.12.06, 10:00 AM ET

As the toll continues to mount from Tuesday’s rush-hour attacks on seven commuter trains in Mumbai--one of the worst terrorist attacks in India’s history--the government is confident that the nation’s financial capital will recover rapidly. Hours after the attack, train services, the city’s lifeline, returned on schedule in several places. At least 185 people were killed in the blasts and about 700 injured.

Ronen Sen, the Indian ambassador to the U.S., says Mumbai’s recovery is due to the resiliency of its people. The attacks, he says, will not affect its role as a global financial center. Indeed, in trading today, India's principal stock index, the Sensex, followed through on Sen's assertion, ending the day sharply higher with a gain of about 3%. Indian tech giant Infosys’ positive first-quarter results--it showed a 50% increase in net profits--were a key reason for the rise.

In an interview, Ambassador Sen tells Forbes.com about India’s experiences with terror and the possible economic impact of the attacks.

Forbes: How much are the blasts likely to affect the Indian markets and foreign investments?

Sen: I don’t think they will affect the markets this time. This is not the first time the city has been targeted. It happened in serial blasts in 1993 and again in 2003. Both times the markets bounced back.

Besides, terrorist attacks are now a global phenomenon. Despite the attacks in London, it remains the financial center of Europe. New York didn’t go down after 9/11. And India has always rebounded back to normalcy much faster than anywhere else in the world.

The stock markets will be impacted marginally, if at all.

[In August 2003, twin bombs killed dozens in Mumbai. In March the same year, a bomb blast on a commuter train there claimed a dozen lives. But the worst attack before Tuesday was in March 1993, when synchronized bomb blasts across Mumbai, including at the Bombay Stock Exchange, left about 250 people dead and many more injured.]

Why do you say cities like Mumbai rebound to normalcy faster than other places?

Mumbai reflects the attitude of the people of India; residents of the city are extremely resilient. They are not given to panic. Already, trains are plying, and journalists are traveling on them with their cameras to show commuters that it’s safe to do so.

Is the Indian government doing anything to reassure businesses?

Right now the topmost priority is to give aid, contact relatives of the victims, save lives. The toll is mounting as we speak. But we’re also investigating the attacks and taking precautionary measures to ensure there is no violent aftermath.

Who does the government think is behind the attacks? They have been linked to terrorist attacks in Kashmir earlier on Tuesday. Is the same group involved?

We have no conclusive evidence as yet, so it will be premature to speculate. But the blasts in 1993 were engineered by Dawood Ibrahim [an international terrorist accused of having links to al-Qaida]. The attacks on Mumbai in 2003 were staged by terror groups Lashker-e-Taiba [Army of the Righteous] and Jaish-e-Mohammed [Army of Mohammed]. They have been put on the list of global terrorist organizations by the U.S. and subsequently changed their names several times. But we know that these groups are still active, and we know where they operate.

There has been a method to the madness of terror groups, to undermine democracy, as they did through the attack on the Indian Parliament in 2000 and during elections in Jammu and Kashmir. They have also tried to damage the economy through attacks on the Bombay Stock Exchange and repeatedly striking Mumbai itself, as well as by circulating counterfeit currency in the Indian markets.

Are there fears of communal riots in Mumbai and other parts of India as retaliation?

No, but we are taking precautions in any case to guard against them. The government is aware of terrorists’ attempts to stir up communal violence in India through such attacks.

And, as I’ve said, the city is going to return to normal much quicker than anyone thought. I’ve got relatives in Mumbai as well, and that’s the sense I get from them. During such traumatic events, whether they are natural disasters or terror strikes, people rise to the occasion to help others, and that’s what makes us resilient.

How can hub cities like Mumbai and Delhi be better armed against future terror strikes?

We don’t have control in a democracy over our borders so we can never have the same security system or as tight border controls as those in an autocracy or dictatorship. Also, because of our democratic roots, there is always a fine balance between the state’s basic obligation to protect the life and property of a citizen and to protect individual rights.

But we can do more elsewhere, if countries follow up the pledges they have made [on combating terrorism] with action. We have Security Council resolutions in place. We have to ensure they are implemented, so terrorists can’t hit and run across borders. There should be no sanctuaries. They should know they will be hunted down wherever they are.

I hope this will also signal to the world at large that terrorism is a menace that has to be handled globally. It cannot be compartmentalized.

In the light of these attacks and the possibility of others in the future, has there been any alteration to your long-term economic outlook for India?

I remain bullish. We’ve faced assassinations of top political leaders, starting with Mahatma Gandhi; natural disasters; terrorists. More people are killed in India from terror attacks than any other country in world. And we’ve recovered well from all of them.

The average growth in India in the last three years is 8%. I’m confident we can maintain this quite easily and, with a little effort, raise it to 9% to 10% and sustain that rate for the foreseeable future. Much of India is growing at 10% to 11%. It’s our averages that come down in some states. And even in these states, the impact of the entrepreneurial spirit that is inherent in our society will soon bring the numbers up. We are a society of entrepreneurs.