Ever since terrorists took charge of Taj and Oberoi hotels, and Nariman House in Colaba, on Wednesday night, disrupting Mumbai's normal
trade and business activity for the next two days, experts have been trying to asses the extent of business loss.
Although there are no exact estimates, since it will take weeks for various agencies and research organisations to calculate the extent of damage, some agencies have still come out with some rough estimates. The initial rough-and-ready calculations estimate that the business loss on those two days is close to Rs 50,000 crore and the foreign exchange hit is approximately $20 billion.
These estimates also weave into their calculations the opportunity loss arising from crucial institutions, such as the stock exchanges, commodities and money markets, which remained closed last Thursday. A caveat might be necessary here: some of these numbers are only snap estimates and the final figures might still be some days away as the damage to the Taj and Oberoi properties are still being assessed, apart from the loss of revenue due to cancellations of bookings.
Ironically, the terror attacks have come at a time when many companies and analysts see the world's second-fastest growing economy as an important piece of the solution in fighting global recession. Though the government has revised the growth rate downwards to 7.5%, it is still considered a healthy clip compared to many developed countries which have officially declared themselves to be in recession.
The city's entertainment, shopping and restaurants also witnessed reduced footfalls, thereby impacting collections. The 75 multiplexes and 20 single-screen theatres in Mumbai do business worth Rs 2 lakh per day from ticket sales alone. Theatre owners also stand to lose substantial revenues from food and beverage sales, which too form a chunk major of their income. Shopping malls and retailers say their businesses took a 50% hit on Thursday and Friday.
Mumbai is among the top ten commerce centers in the world and contributes about 5% to India's GDP. It accounts for 60% of customs duty collections, 40% of foreign trade and income tax collections each and 20% of central excise tax collections, besides Rs 40,000 crore ($8 billion) in corporate taxes to the Indian economy, according to IndusView Advisors, an India-focussed cross-border advisory firm.
Mumbai also accounts for 25% of the industrial output, 40% of maritime trade and 70% of capital transactions in the economy. Mumbai's per-capita income is Rs 48,954 ($990), which is almost three times the national average.
Given the overwhelming importance of Mumbai to the national economy, the corporate and banking fraternity is confident that the city will soon bounce back. South Mumbai, which was targeted by the terrorists, is home to important headquarters like Bombay Stock Exchange, Reserve Bank of India, the Tata group, the Mukesh Ambani group, State Bank of India, and a host of other companies, banks and financial institutions. It is, in many ways, also the nerve centre of the Indian economy.
Says IndusView chairman Bundeep Singh Rangar, "Mumbai is a very resilient city. Each time it's been the target of a terrorist attack, it rebounds stronger and more resolute." Rangar cited the incident of the Mumbai train blasts (July 11, 2006) when the next day, as a show of investor confidence, the BSE sensex the benchmark index went up by nearly 1% on the in morning trade and finally closed 3% higher. Even on Friday (November 28), the Sensex snubbed the terror attack and ended at 9093, a gain of 66 points.