'Terror strike will not affect Indian economy'
By siliconindia   |   Wednesday, 03 December 2008, 21:27 IST   |    11 Comments
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'Terror strike will not affect Indian economy'
New Delhi: "As long as India's relation with Pakistan is not derailed by last week's terrorist attacks on Mumbai, the country's economy may outperform expectations," Jim O'Neill, chief economist at Goldman Sachs Group, was quoted as saying by Bloomberg press. O'Neill, who in 2001 coined the acronym BRIC from the initials of the four big emerging economies of Brazil, Russia, India and China, said, "So long as Indian and Pakistani policy makers don't do really silly things, India is in a position to start doing better than people think it might do." India's foreign ministry had blamed Pakistani 'elements' for the the attack in Mumbai and told its neighbor to match its words of cooperation with 'strong action' to build a 'qualitative new relationship.' The terror attack came four days after President Asif Ali Zardari called for improved economic and political ties with India and said Pakistan won't be the first country to use a nuclear weapon in any conflict with India. "I don't feel threatened by India and India shouldn't feel threatened by us," Zardari said in a video conference at an event in New Delhi on Nov. 22. O'Neill said the fact that the Bombay Stock Exchange's stock index rose on the first trading day after the attacks showed there was no "panic" among investors. "It's not going to have any long-term impact on business in India," said Karl Slym, managing director of the Indian unit of General Motors, the largest U.S. automaker. "We have a billion-dollar investment. We had a new plant that just opened a couple of months ago. We continue to ramp up that new plant and other investments as well for India." O'Neill said the drop in global crude oil prices 'is really important positive news' for India, which imports three - quarters of its oil needs. Falling oil prices have helped slow India's inflation to 8.84 percent from a 16-year high of 12.42 percent in less than three months. That may result in more 'aggressive' interest- rate cuts by the central bank, said Sonal Varma, an economist at Nomura International in Mumbai. "If India can stop worrying about its constant coalition politics and do some things to stimulate investments including attracting more foreign direct investments both in finance and elsewhere, I think India could easily start to do better soon," O'Neill said.

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