Indian economy not to be affected by tsunami: experts

Thursday, 30 December 2004, 08:00 Hrs
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MUMBAI: India's robust economy is likely to come out unscathed from the grip of killer tsunami as it has not adversely impacted on the country's infrastructure or wider industrial activities, say experts.

"The situation is really very tragic as so many lives have been lost. But I don't think it will have any impact on the economy," said D.H. Pai Panandiker, an economist with New Delhi-based think tank RPG Foundation.

"The damage caused by tsunami was restricted to some coastal areas of the country. The manufacturing base or other industrial sectors as well as the infrastructure has remained completely unaffected," Panandiker told IANS.

"We may see some delay in transhipment on select routes in the days ahead but it will not put any kind of pressure on the economy. There isn't any possibility of tsunami rocking the economic growth projections for this year."

India's economy is projected to expand at between 6 and 6.5 percent in the current fiscal year ending March 31, 2005.

Although the projections are lower than the previous year's blistering 8.2 percent growth, experts say India would continue to rank in the list of the fastest growing economies globally.

According to global ratings agency Standard and Poor's, there is no reason to change the sovereign debt ratings of the countries in Asia hit by the Dec 26 massive earthquake off Sumatra and subsequent tsunamis.

"The effect on economies of South and Southeast Asia will be muted by the inevitable rapid reconstruction of the devastated areas," said Ping Chew, director (sovereign and public finance ratings group) of Standard and Poor's.

"The human losses are tragic and huge, but the dents to the countries' GDPs (gross domestic products) will be smoothed by the spike of investment for reconstruction and return of tourism to most areas," he added.

In an indication of the bullish Indian industrial sentiment despite the devastation caused by the tsunami, Indian shares have defied post-disaster gloom and touched all-time highs in three straight sessions after Sunday.

Although select companies located in the tsunami-affected regions have suffered property damage or temporary disruption in operations, they say it will not have any adverse impact on their profitability.

Private sector Oriental Hotels said that 10 sea facing cottages of the company at Fisherman's Cove Beach Resort in Chennai were affected by the tidal waves that lashed the shores of the city.

"The damage however was minimal and was caused to the interior furniture and fittings of the cottages," said a company statement.

"The property is fully insured and necessary steps have been initiated to restore the cottages for normal operation at the earliest.

"The resort is functioning normally. However, there have been cancellations of bookings by tourists for the next couple of days."

Hindustan Oil Exploration Company Ltd. says its joint venture production operations in offshore Pondicherry are continuing safely and that no damage has been reported so far.

"The coastal areas are basically hub of tourism activities. So, travel and tourism industry will definitely be affected in the days ahead," said Arun Patankar, principal adviser to the Confederation of Indian Industry (CII).

"Although reconstruction and rehabilitation in these areas will require lot of financial resources, it will not have a negative impact either on the economic growth or on the fiscal deficit."

Source: IANS
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