No long-term terror attack impact on economy: Industry

November 28th, 2008 - 6:41 pm ICT by IANS  

SensexNew Delhi, Nov 28 (IANS) The terror attacks will not have any long-term impact on the economy, though two specific sectors - hospitality and tourism - will be hit immediately, according to India Inc.“There maybe short-term impact on industry, but there will not be any long-term impact,” said D.S. Rawat, secretary general of an industry lobby, the Associated Chambers of Commerce and Industry (Assocham).

Bearing this out, the Indian equities markets ended Friday in the green, though gains were marginal.

The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally finished at 9,097.92, up 71.2 points or 0.79 percent from its previous close at 9,026.72 points.

The broader-based 50-share S&P CNX Nifty of the National Stock Exchange (NSE) too closed higher at 2,753.00, up 0.75 points or 0.03 percent from its previous close at 2,752.25 points.

“It is really difficult to assess the actual losses. But business activities like shopping, entertainment, transport all are equally affected,” Rawat said.

And while this is Mumbai-specific, the sectors that he said would take an immediate hit across the country would be tourism and hospitality.

Added S.P. Jain, Hotel and Restaurant Association’s western region president: “As a result of the economic slowdown, cancellations (of bookings) had already begun. The latest terrorist attack will now lead to further losses. We expect cancellations to go up by 25-30 percent.”

Agreed Manav Thadani, managing director, HVS International-India, a hotel consultancy firm. “In the short term, the impact of these attacks on the Indian hospitality industry will be quite visible,” he said

Thadani said in the past few months, the flow of foreign tourists has dropped 10-15 percent, most of who come from the US and the UK - the two countries whose nationals were reportedly targeted in two Mumbai hotels.

The fall in tourist inflow, in turn, will hit the transport sectors.

“There is a panic situation all around,” Rajeev Malhotra, a customer executive of online travel agency, said.

“People are cancelling tickets. At this moment we will not be able to tell you the exact number of cancellations. But even people who have planned their trip 15 or 20 days later in December are also cancelling their flights and travel bookings. I feel it is because of sheer panic,” he added.

Vishal Kapoor, Chief Executive Officer, multiplex chain Fun Cinemas said the footfall in malls and multiplexes hotels would also fall.

“For some time, people will avoid visiting malls and multiplexes. Certainly the business will be affected. And this sentiment is going to stay for at least some weeks till life bounces back to normal,” he said.

According to Kapoor, the multiplex sector could lose up to 20-25 percent.

Meanwhile, in a statement issued here, Assocham senior vice president Swati Piramal said national and industrial security is in danger and surveillance needs to be mounted on a war footing.

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