Resilient India will carry on
India will carry on resiliently as ever. It is a remarkable statement to make in the midst of another of India’s multiple 9/11s. With nearly 200 dead and counting and with hundred injured, everyone in India is filled with a silent rage. You have to be there to feel the disgust Indians feel at this senseless attack aimed at the nerve center of India’s commercial capital. I have lost count of the number of significant terrorist attacks India has suffered over the last few years and these attacks have been inflicted all over the country: Mumbai, Delhi, Hyderabad, Jaipur, Bangalore, Kashmir... and the list goes on.
India has hitherto managed to brush aside all attacks and Indians in a remarkably resilient and resolute manner have shrugged off the attacks on their safety and security and have carried on with their life albeit a bite more than shaken. The daily activity of an average Indian multiplied a billion plus times has managed to generate an average GDP growth rate in excess of 7% over these very years which have coincided with recurring deadly terrorist attacks.
Therefore, when frayed nerves sooth a bit and emotions which are currently running high subside, it is this very resilient nature of India which will be highlighted once again. India is too large to be affected significantly by disturbances in any one part of the country and this is the reason why terrorists have now resorted to attacking highly symbolic targets which will attract the attention of the world. It is inevitable that Pakistan's involvement in yet another round of attack on India will become visible soon. Concurrently, shrill cries advocating the need to teach Pakistan a hard lesson will reach a crescendo, a lesson which will force Pakistan to keep its proxy army of Islamic militants and ISI in check. The pressure to act in mounting on the government and Indians are clamoring for decisive action against the terrorists and their sponsors.
However, India would be well to rein in the horses for now. India has never been so well positioned as now in its long stretched battle with Pakistan. Pakistan, close to bankruptcy, is self destructing at a furious pace after defeats in multiple wars with India over the years. It is being eaten alive by the very Islamic militants it has created and nurtured over the years. It is in an unenviable position of being hemmed in by a resurgent India on its east and by an India friendly Afghan government to its west. Add to it the numerous Islamic militant organizations running their own fiefdoms in its autonomous Tribal regions and the separatist movement in Baluchistan and it is clear that the writ of the Government of Pakistan runs only in a tiny silver of its territory. It is a bankrupt nation, a failing state which is doomed to fight its own civil wars. The same face of terror now confronts the governments in both Pakistan as well as India.
India cannot afford to spend precious resources fighting provocations from Pakistan, grave though they might be. India would do best to marshal its resources and focus on the task of invigorating economic growth through packages designed to promote domestic consumption and infrastructure growth. Terrorism is the unnecessary pain that a democratic and free India has to bear as it builds on its strategic alliances with the West.
There is no doubt that significant resources will be devoted to strengthening the internal security apparatus and intelligence gathering processes. Closed circuit camera based monitoring systems, business security systems, motion detectors, card or keypad access, remote video camera surveillance, and monitoring sensors and devices will increasingly be woven into the infrastructure at the planning stage itself and will increasingly complement the current security system based on sheer numbers of inadequately and sub optimally trained human bodies. Technology based security solutions will increasingly find a vast and ready market waiting for them in India.
A falling oil bill works tremendously in India's favor and minimizes the havoc high oil prices could have caused in the face of decreased foreign exchange inflows on account of investments as well as reduced earnings from exporting IT services, metals, minerals, gems, jewels and textiles to a world in the throes of a significant slowdown. With about 60% of its GDP independent of foreign exchange linkages and an inward focused conservative banking sector which has escaped almost unscathed from the global banking crisis, India is well positioned to benefit from a significant domestic stimulus effort. The challenge will be fund it creatively given the limited maneuverability available due to its existing large fiscal deficit. However, done right India could very well be amongst the first nations to recover economically and be one of the growth engines the world needs to pull itself out of the morass it is in today.
Atim Kabra can be reached at email@example.com. He is based in Singapore and runs two India focused private equity funds. The views expressed herein are his personal opinions.