'Indian economy can absorb impact of a short Iraq war'

Thursday, 20 March 2003, 20:30 IST   |    3 Comments
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NEW DELHI: A quick resolution of the U.S.-led military strike on Iraq would not have any adverse impact on the Indian economy, said the chief of one of India's premier business lobby groups Thursday. "If you look at the reaction of stocks markets and oil prices across the world to war, it becomes clear the global economy hopes it is going to be a short war," said Ashok Soota, president of the Confederation of Indian Industry (CII). "We don't expect it to be a long war. And in that case, it will have a very limited impact on the Indian economy," Soota told media persons on the sidelines of a business conference here. The U.S. and its allies Thursday launched a war to disarm Iraq. The military strikes came some two hours after Bush's ultimatum to Iraqi President Saddam Hussein and his two sons to flee the country expired. India's badly beaten-down shares rose sharply higher by Thursday afternoon, as investors bet on a quick resolution of the military action against Iraq. The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex was quoting at 3,192.93, a gain of 71.75 points or 2.3 percent over its previous session's close, at 4 p.m. Expectations of a quick resolution to the war also boosted market sentiment across all the major stock markets in Asia Thursday with the benchmark indexes rising two to four percent. Japanese stocks jumped more than two percent and hit a two-week high by mid-session on Thursday. Crude oil also fell for a sixth session to a three-month low on expectations a U.S.-led war against Iraq will cause limited disruption to supplies from the Middle East. For months, the prospect of military action against Iraq, which has the world's second-largest oil reserves after Saudi Arabia, has driven up oil prices and weighed heavily on the financial markets across the globe. "With the launch of the attack, the clouds of uncertainty have been removed. I think things will come back to normal soon," Soota said. Soota, however, said in the short-term the Indian travel and tourism industry would be badly hit, as travellers put off their tour plans till the resolution of the conflict.
Source: IANS
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