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NEW DELHI, Nov 28: Here are some political, economic and geopolitical scenarios for India after the attacks in Mumbai. At least 124 people were killed during coordinated attacks by Islamist militants.
The Congress-led government faces several state elections and a general election in early 2009. Many analysts expected it to fare badly before the Mumbai attacks, with voters frustrated at rising prices and an economic slowdown.
There has also been growing anger at bombings in Indian cities this year, which has sparked criticism from the main Hindu-nationalist opposition Bharatiya Janata Party that the government is soft on terrorism.
The state elections are testing the political waters ahead of general elections. The state polls are also important because success would give either party more leverage for securing alliances with smaller parties before the national poll.
— The Congress-led government could be punished in the polls if voters blame the government for being soft. The attacks could play into the hands of the BJP, which has made being tough on terrorism one of its major campaign planks.
One state election, in Madhya Pradesh, was held during the siege. Turnout was higher than expected, perhaps suggesting the Mumbai attacks have motivated voters to participate. Results of that vote are not yet known.
— Indians could rally around the government, as can happen in times of crisis. A firm stand by government, perhaps taking some kind of diplomatic or symbolic action against Pakistan, may win over Indians.
— With Islamist militants carrying out the attacks, communal politics could also become an election issue. There could be a backlash against India’s minority Muslims by radical Hindu groups. Religious tensions could increase. There have been reports that Hindu militants have already carried out bombings in revenge for suspected Islamist attacks.
THE ECONOMY: The economy is already slowing and the pace of growth is expected to decelerate further due to high interest rates earlier in the year and the global financial crisis, which could dampen demand and hurt investment spending.
Analysts say the coordinated attacks could hasten the pace of monetary easing as policy makers could try to counter negative sentiment generated by the incident.
The central bank expects the economy to grow 7.5-8 per cent in the fiscal year to March but many private sector economists see it expanding about 7 per cent, much lower than the sizzling growth of 9 per cent or above recorded over the last three fiscal years.
Analysts say the attacks are likely to have a temporary effect on tourism and may shake investor confidence and that could hurt the economy.
The government’s response to the rising threat of attacks is also seen as crucial to investor confidence, with a soft approach potentially damaging to foreign direct investment.
FDI rose 137 per cent to $17.21 billion in April-September and the government expects it to exceed $35 billion this fiscal year.
PAKISTAN RELATIONS: In 2001, India blamed Pakistan for a militant attack on its parliament. The incident led to a tense stand-off between the nuclear-armed neighbours, with both armies facing each other “eyeball to eyeball” across the frontline.
Tensions have already risen this time, with India blaming Pakistani-linked elements for the attacks. Pakistan has responded by accusing New Delhi of playing politics.
While, it would be a shock if Pakistan’s new civilian government were implicated in these attacks, analysts say the involvement of members of the Pakistan military’s spy agency cannot be ruled out.
In an attempt to defuse tensions, Pakistan has already agreed to send its military spy chief to India to share information.
Despite this gesture, trust between the old rivals will be dealt another blow by this attack. India could step up its anti-Pakistan rhetoric, already accusing its neighbour of failing to rein in “the infrastructure of terror”.
The peace process which began in 2004 will at best be stalled ahead of Indian elections, if not go backwards. —Reuters
