On Sept. 11, 2001, summoned by my boss, I watched horrified on a TV at my office as a second plane crashed into New York's World Trade Center, a little more than 20 minutes after the first plane hit. I don't remember how he knew to turn on the TV. I think someone had called him. I do remember him saying, "Oh my God, these aren't accidents. Someone is crashing the planes on purpose."
I struggled with the immediate desire to go pick up my then-infant son at day care, fighting it throughout the day as I listened to reports of the attacks on the Twin Towers and the Pentagon, and finally giving in a few hours before my usual quitting time. Within a day or so, my husband began asking me about a conference in Europe that I was slated to attend in November. "You aren't going to go, are you?" he asked. (I didn't.)
Reading this story in The Telegraph, an Indian newspaper, took me back to how I felt on 9/11 and in the first few weeks after the disaster. It describes how many businesses located near the site of terror attacks in Mumbai closed in the days following the attacks, while attendance suffered at companies that remained open, even those not located near the attacks. Some companies actually advised employees to work from home.
I began wondering whether the financial impacts on India would be similar to what the U.S. experienced following 9/11. The answer is likely "yes," though it turns out this won't mean what I initially thought. My memory failed me with this aspect of 9/11. It wasn't nearly as hard on the U.S., financially, as I remembered.
As Forbes reports, 9/11 had no measurable lasting effect on the national economy. (The national psyche is another matter.) According to a 2002 study published by the Congressional Research Service, 9/11 had few adverse effects on aggregate demand, and its economic impact was short-lived. The economy was in the third consecutive quarter of contraction at the time of the attacks, but it rebounded in the fourth quarter.
Forbes speculates that the economic impact on India will be "less significant" than the post-9/11 impact on the U.S. Unlike the U.S., India has experienced terrorist attacks before and thus should rebound more quickly from the Mumbai attacks, according to the article.
It offers India's stock market as an example. The New York stock market closed down for nearly a week after 9/11. When the market opened on Sept. 17, the Dow Jones index dropped 685 points. In Mumbai, markets opened on Nov. 28, with the tragedy still in progress. While the rupee had declined a day earlier in global markets, the Sensex on the Bombay Stock Exchange increased slightly on the 28th.
Newsweek has a similarly optimistic outlook, touting India's "resilience." However, it mentions two possibilities that could make long-term economic prospects look considerably more grim: terrorists successfully creating sectarian unrest between India's Hindu majority and its Muslim minority, and government inaction to improve the country's preparedness to deal with terrorists.
Ratan Tata, chairman of Tata Sons, the holding company of the Tata Group, made an unusual public plea for the government to do so, reports the Wall Street Journal. It quotes the "senior statesman of Indian business":
We had a bomb blast some years ago; we should have learned to get a crisis infrastructure in place that could snap to attention as soon as something happens. We still don't have that in place.
Tata's statements were "hugely important," said the CEO of outsourcing provider Genpact, as they may prompt other companies to speak up and demand a more aggressive anti-terrorism response from the government.