New Delhi: Here are some economic, geopolitical and political scenarios for India after the attacks in Mumbai, where 183 people were killed during coordinated attacks by militants.
Economy
The economy is already slowing and the pace of growth is expected to decelerate further due to high interest rates earlier in the year and the global financial crisis, which could dampen demand and hurt investment spending. Analysts say the coordinated attacks could hasten the pace of monetary easing as policy makers could try to counter negative sentiment generated by the incident.
The Reserve Bank of India expects the economy to grow 7.5-8 per cent in the fiscal year to March but many private sector economists see it expanding about 7 per cent, much lower than the sizzling growth of 9 per cent or above recorded over the last three fiscal years.
Analysts say the attacks are likely to have a temporary effect on tourism and may shake investor confidence and that could hurt the economy. The government's response to the rising threat of attacks is also seen as crucial to investor confidence, with a soft approach potentially damaging to foreign direct investment. FDI rose 137 per cent to $17.21 billion in April-September and the government expects it to exceed $35 billion this fiscal year.
Relations with Pakistan
In 2001, India blamed Pakistan for a militant attack on its parliament. The incident led to a tense stand-off between the nuclear-armed neighbours, with both armies facing each other "eyeball to eyeball" across the frontline. The Mumbai attacks bring tension to its highest level since Mumbai train bombings in 2006 blamed on militants, with India blaming Pakistani-linked elements.
Pakistan, while promising to cooperate in investigations, has also accused New Delhi of playing politics. Pakistan President Asif Ali Zardari has appealed to India not to punish his country for the Mumbai attacks, warning that provocation by rogue "non-state actors" posed the danger of a return to war between the nuclear-armed neighbours.
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While it would be a shock if Pakistan's new civilian government were implicated in these attacks, analysts say the involvement of members of the Pakistan military's spy agency cannot be ruled out. In an attempt to defuse tensions, Pakistan had agreed to send a representative of its military spy agency to share information but later backtracked on a promise to send the agency's chief, a move unlikely to calm Indian tempers.
India could step up its anti-Pakistan rhetoric, already accusing its neighbour of failing to rein in "the infrastructure of terror". The peace process which began in 2004 will at best be stalled ahead of Indian elections, if not go backwards.
Politics
The Congress-led government faces several state elections and a general election in early 2009. Many analysts expected it to fare badly before the Mumbai attacks, with voters frustrated at rising prices and an economic slowdown. There has also been growing anger at bombings in cities this year, which has sparked criticism from the BJP that the government is soft on terrorism.
The state elections will test the political waters ahead of general elections. The state polls are also important because success would give either party more leverage for securing alliances with smaller parties before the national poll.
The Congress could be punished in the polls if voters blame the government for being soft. The attacks have already led to the resignation of India's security minister and the appointment of Finance Minister P Chidambaram for the job. The attacks could play into the hands of the BJP, which has made being tough on terrorism one of its major campaign planks. One state election, in Madhya Pradesh, was held during the siege.
Turnout was higher than expected, perhaps suggesting the Mumbai attacks have motivated voters to participate. The Delhi Assembly elections on Saturday also saw a higher-than-expected turnout, which could help the BJP. Results of these votes are not yet known. Indians could rally around the government, as can happen in times of crisis.
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