The Mumbai terror attack and its short-term impact on the hotel, travel and tourism economies reinforce conventional thinking that growth and a secure environment go together. But India has also housed another narrative of moderate-to-high growth in the worst years of terrorism since the nineties. So which is true?

In India's case, at least, there is no straight link between growth and a secure environment, even though this is eminently desirable. In parts of India, however, the link seems valid. For example, because of insurgency in the northeast and naxalism in Chhattisgarh, they do not attract investments despite their oil and mineral wealth. On the other hand, two serial blasts (1993, 2006) have not deterred Bombay's growth, which, according to one estimate, brings in '40 per cent of foreign trade, 60 per cent of customs' duty collection, 40 per cent of income-tax collection, 20 per cent of central excise collection, and $ 10 billion in corporate taxes'.

But what makes the November 26-28 Mumbai terror attacks different? Sixty-two hours of nonstop terrorism engulfing two high-class south Mumbai hotels makes it different. But something else too. India ceased being a magical growth story in the September quarter due to global recession. The terror attacks have made it appear worse. Factoring for 'external shocks' such as terrorism and the global crisis, the Indian Council for Research on International Economic Relations (ICRIER) has forecast 6 per cent GDP growth for India in 2008-09 and less than 4 per cent in 2009-10, the lowest of any forecast so far. But even this low estimate is less on account of terrorism than the global recession.

This is a double-edged sword. While the resilience of the Indian economy to terrorism is good to know, it has made governments (present and past) complacent. Governments have guiltlessly accepted terrorist victims as statistic so long as they are not politicians or plutocrats. The plutocrats, some of who perished in the Mumbai attack (all deaths are saddening, especially young deaths), jolted a complacent government. If the economy were strong as before, there would be more voices (Indian, western, government) playing down terrorism.

Since at least 2004, India has had to bear the cross of a 'high-risk/ high-return' economy.

Does it change now? Not at least for foreign private equity investors chasing opportunities. Their advisers have told the media that 'Terrorist attacks won't deter their investment preferences…What the attacks have done is to bring in some confusion and discomfort among the investors. But these are short-term…Even if it was decided that staff travel to India was too dangerous, that would not necessarily prompt a sell-off (because) major Indian firms (would be expected) to travel to London to maintain heightened contact with their investors.'

Others are not so sanguine. The Federation of Indian Exports Organisations sees a further hit to exports since foreign buyers who prefer to stay at five-star hotels will put off visits — and for longer, if no visible, convincing and sustained counter-terrorism measures are taken. The IT industry that had spread its risk with back-up operations in other countries like China won't endlessly wait for India to secure itself. Ditto for BPOs/ KPOs. Entities keen to tap India's three hundred million middle-class market will battle against their better judgment to stay engaged, but will give up if the risks grow.

It is less built upon, but more used as an argument, as now, that India is substantially a domestic economy (58 per cent according to one unconfirmed estimate), and that how foreign business interests refract this country through the terrorism prism is ultimately unimportant, so long as India produces and consumes for itself happily. This is perhaps one reason why terrorism in all these years has impacted the economy less than it should, and indeed, that the economy has grown in spite of terrorism. But a connected proposition might also be examined. Wouldn't India have grown more without or at any rate determinedly contained terrorism? And if, indeed, India was so self-contained, why should the September quarter downturn be in sync with global recession, and why ICRIER's frightening slump figures for 2008-10?

In truth, India is a considerable domestic economy but is connected financial sector-wise, trade-wise, investment-wise, with the rest of the world. But the madness and unremitting greed leading to the September bankruptcies in the U.S. (Lehman Brothers & Co.) warn that such contacts should be cautious, transparent, and fully risk-assessed. But the danger in viewing terrorism through the eyes of either foreign or exclusively Indian business or commercial interests is to calibrate the risks flowing from it, and to devise ways to live with it. But terrorism cannot be lived with. Precisely because its earlier victims were the poor and the middle class, the government and the political class ignored it or trivialised it into everyday discourse, from which votes could be minted, one way or another. But the Mumbai terror attacks have dramatically exposed the horror of accommodating terrorism.

After the Mumbai attacks, the narrative of terrorism and Indian economy recovery has become inextricably interwoven. While any economic recovery on its own may take one to three years' time, it won't be assisted (and definitely impaired) if Mumbai repeats, as Pakistani Al Qaeda and Taliban experts warn to expect, in Mumbai itself, or Goa or Bangalore or Delhi. While it is wise to adhere to the convention of an alliance between growth and a secure environment, it is wiser and certainly inescapable to combat terrorism for the evil it is. The Americans took the 9/11 attacks as an assault on their homes and their way of life. That is yet to happen in India.

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