A REPORT ON IMPACT OF TERRORISM IN MUMBAI ON INDIAN ECONOMY A CASE STUDY
Report submitted in partial fulfillment of the requirement for the degree of BBA
GUIDED BY:
SUBMITTED BY:
Mr.Sunil Kumari
Ankur Jaiswal
Kasturi Ram College Of Higher Education (2009-2012)
TABLE OF CONTENTS
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PAGE S.NO
PARTICULARS NO.
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1
LITERATURE REVIEW
1
2
OBJECTIVES OF THE PROJECT
2
4
RESEARCH METHODOLOGY
3
5
INTRODUCTION
4
6
TERRORIST ATTACKS IN INDIA
6
7
MUMBAI-FINANCIAL CAPITAL OF INDIA
7
8
BOMBAY BLAST 1993
9
9
MUMBAI ATTACK 2008
12
10
STEPS TAKEN TO COUNTER TERRORISM IN INDIA
20
11
HOW OTHER ECONOMIES FOUGHT TERROR
25
12
SUGGESTIONS
27
13
CONCLUSION
28
14
BIBLIOGRAPHY
29
DECLARATION
This is to certify that Report entitled “Impact of Terrorism in Mumbai on Indian Economy- A Case Study” which is submitted by me in partial fulfillment of the requirement for the award of BBA to Kasturi Ram College College Of Higher Education, Delhi
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comprises only my original work and has not been submitted in part or full for any other degree or diploma of any university.
(ANKUR JAISWAL) 046/DSPSR/FT-08
(Mrs. SUNIL KUMARI) Supervisor
ACKNOWLEDGEMENT
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I take this opportunity to express my deep sense of gratitude to all those who have hav e contributed significantly by sharing their knowledge and experience exp erience in the completion of this project work. I am greatly obliged to, for providing me with the right kind of opportunity and facilities to complete this venture.
I am highly thankful to Mr. Gaurav Ahuja my internal faculty guide under whose able guidance this project work was w as carried out. I thank him for his h is continuous support and mentoring during the tenure of the project. Finally, I would also like to thank all my dear friends and my family for their cooperation, advice and encouragement during the long and arduous task of carrying out the project and preparing this report.
LITERATURE REVIEW
Terrorist attacks are usually shocking to us, the sheer unpredictability of the attack on innocent people is what makes us gape and gasp. One of the common targets that Page | 5
terror ter rorist istss choo choose, se, are hig high h pro profil filee pol politi itical cal or eco econom nomic ic tar target gets, s, suc such h as the the Bombay Bom bay sto stock ck exch exchang ange, e, the Ind Indian ian Par Parlia liamen ment, t, THE Twi Twin n Tow Towers ers,, etc etc.. Man Many y countries of the world have been spending time and resources to counter terrorism. To see the impact of terrorism on the economy, we have to first define what we mean by the econom economy. y. Econom Economy y invol involves ves activities activities that are related to the production and distribution of goods and services in a particular geographic region. There have been various terrorist attacks in India and the Mumbai has been their target many times. The reason is that Mumbai is the economic capital of India. Many foreign investors tend to look at India through the prism of Mumbai. the city has seen many terrorist attacks like – Bombay Blast 1993 and Mumbai Attack 2008. Terrorist attacks att acks aff affect ectss the eco econom nomy y of the coun country try,, its var variou iouss ind indust ustri ries es lik likee tou touris rism, m, aviation, insurance, business etc.
OBJECTIVE OBJECTI VES OF THE T HE PROJECT PRO JECT
As the title of the project suggests, the objective of the project is to study the impact of terrorist attacks in Mumbai on Indian Economy.
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SUB- OBJECTIVES OBJECTI VES OF THE TH E PROJECT: PROJECT :
To know how well the Indian Government deals with terrorist attacks and its aftermath.
To study the laws or provisions related to terrorism.
To study the impact of terrorism on various sectors such as productivity, business, tourism, IT, oil and gas, insurance.
To know how other economies have fought terrorism.
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RESEARCH METHODOLOGY
Thee purp Th purpos osee of rese resear arch ch meth methodo odolo logy gy is to prov provid idee a sound sound plat platfo form rm for for the the researcher to achieve the aim and objectives of the study. Present Present study work is a descriptive descriptive and analytical analytical research .The secondary secondary data for the study has been drawn from various magazines such as Business Today, Corporate India., Business world and internet for collecting the information.
LIMITATIONS OF THE STUDY •
The information used in the research is based on the Macro Scenario.
•
The Research Design used in this project is rigid and is not flexible.
•
The Research is entirely based on Secondary Data .
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INTRODUCTION
TERRORISM
Terrorism is the systematic use of terror, violent or destructive acts (using sophisticated
weapons) committed by groups in order to intimidate a population or government into granting their demands. Terrorism refer only to those acts which (1) Are intended to create fear (terror), (2) Are perpetrated for an ideological goal (as opposed to a materialistic goal or a lone attack) (3) deliberately deliberately target target (or disregard the safety of) non-combatants. non-combatants. The strategy of terrorists is to commit acts of violence that draws the attention of the local populace, the government, and the world to their cause. The terrorists plan their attack to obtain the greatest publicity, choosing targets that symbolize what they oppose. A person who practices terrorism is a terrorist . Acts of terrorism are criminal acts accor accordi ding ng to Unit United ed Natio Nations ns Secur Securit ity y Counc Council il Reso Resolu luti tion on 1373 1373 and and the the domes domesti ticc jurisprudence of almost all nations. Terrorist attacks are often targeted to maximize fear and publicity. They usually use explosives or poison, but there is also concern about terrorist attacks using weapons of mass destruction.
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INDIAN ECONOMY
India’s India’s economy has been one of the stars of global economics economics in recent years, growing 9.2% in 2007 and 9.6% in 2006. Growth had been supported by markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital market. India economy, the third largest economy in the world, in terms of purchasing power, is going to touch new heights in coming years. As predicted by Goldman Sachs, the Global Investment Bank, by 2035 India would be the third largest economy of the world just after US and China. It will grow to 60% of size of the US economy.
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TERRORIST TERRORI ST ATTACKS IN INDIA
The country has never been as terrorised as it is now. There have been various terrorist attacks in different parts of the country. Be it in Delhi, Mumbai, Punjab, Assam, Jammu and Kashmir, etc. hardly any state has been left from the attacks of the terrorists on the innocent innocent people. people. Terrorism Terrorism left no part of the country untouched, untouched, having made in-roads into the south by attacking Bangalore and Hyderabad, Ayodhya, Varanasi, Lucknow, Ahemdabad, etc.There has been increase in terrorist attacks from across the border in recent years. Repeated terror attacks have undermined citizen’s security. Overall taking all forms of violence together, 2004-08 witnessed 25,042 incidents and 6,646 casualties as compared to 36,259 incidents and 11,714 casualties during 19992003.
Mumbai has been the most preferred target for most terrorist organizations.
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MUMBAI -FINANCIAL -FINA NCIAL CAPITAL CA PITAL OF INDIA I NDIA
It is the economic and financial capital of India. It is the base of India's offshore oil industry. It provides a vision of what the rest of India could be in years to come if the modernization and globalization policies of the government continue to make progress. It is the home of India's largest share market. It is a major contributor of the tax revenue of the the gov gover ernm nment ent.. Many Many mult multin inat atio ional nal comp compan anie iess pref prefer er to loca locate te thei theirr corp corpor orat atee headquarters in Mumbai. Mumbai, home to Asia’s oldest stock exchange, the country’s central bank and capital markets regulator, and India’s largest corporate houses—the Reliance, Tata and Birla groups groups—ac —accou counts nts for 5% of the countr country’s y’s $1 trilli trillion on (Rs49. (Rs49.9 9 trilli trillion) on) econom economy y and contributes one-third of its direct taxes.
Though Mumbai is not India, many foreign investors tend to look at India through the prism of Mumbai. If internal security in Mumbai is good, they look at internal security in India as a whole as satisfactory. If it is bad in Mumbai, they tend to look on security of life and property in the rest of the country as worrisome, even if this is not necessarily so. Mumbai is one of the world's top 10 centres of commerce and contributes to about 5 per cent of India's GDP and accounts for 25 per cent of the industrial output, 40 per cent of maritime trade, and 70 per cent of capital transactions to the economy.
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Mumbai has been the most preferred target for most terrorist organizations because they want to disrupt economic progress of India. The city has seen eight major terrorist attacks in the past 15 years. For example:•
12 March 1993 – Series of 13 bombs go off killing 257.
•
26 November 2008 to 29 November 2008 – series of attacks killing at least 172.
These terrorist attacks have affected Indian Economy.
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BOMBAY BLAST 1993 12 March 1993 – Series of 13 bombs go off killing 257.
Mumbai in India has been a tempting target for jihad terrorists since 1993. The 13 bomb blasts that occurred in public places on March 12, 1993 — killing 257 people and injuring nearly thrice as many in March 1993, the places where the blasts took place include the stock exchange building on Dalal Street, the Air India building in Nariman Point, Point, three three hotels hotels (Sea (Sea Rock, Rock, Juhu Juhu Centaur Centaur and Airpor Airportt Centau Centaur) r) beside besidess crowded crowded markets. The targets chosen were of economic significance, such as the Mumbai Stock Exchange building, the office of an airline, a hotel near the airport, etc.
SHATETERING THE PEACE
India is no stranger to major attacks, with a string of uprisings and explosions since independence in 1947. Bombay, the financial centre, was also hit by a series of bomb blasts in 1993 that killed 317 people and wounded more than 1,000. The terror attacks in Mumbai were not merely aimed at exacerbating tensions between India and Pakistan, between Hindus and Muslims. These attacks were also aimed at hurting the economy of one of the world’s fastest-growing large countries. The attacks were designed to destroy the relative peace and economic rise being enjoyed by the city. The explosions were aimed at targeting the economic activity of the city as well as Bombay as a tourist destination.
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DOLLAR PRESSURE
The immediate reaction was one of shock. The rupee lost 0.15% against the dollar to close at its lowest level for 10 days. The slump came at a time when the share market had been expected to rally into a sixth straight week, buoyed by strong foreign investment and expectations of strong economic growth after a good monsoon.
TOURISM
Bombay is attraction for foreign tourists for recuperation as well as for trading. Any act of terrorism is likely to deter tourists to come to the city. As a sequel there to the demand for hotel occupancy considerably came down. The demand for hotel accommodation in five star hotels in Mumbai dropped considerably. Tourism and allied industries were badly affected by the terrorist attack bringing down the foreign exchange reserves of India.
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IMPACT ON BUSINESS
Immediately after the blasts, Indian shares fell by nearly 3%, while The benchmark index of the Bombay stock exchange, the Sensex, closed down 3% or 119 points at 4,005 putting an end to the five-day rally which drove prices up 5% last week to their highest level in 29 months.
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MUMBAI ATTACK 2008 26 November 2008 to 29 November 2008 – series of attacks killing at least 172 .
The recent terror attacks in Mumbai, India took everyone by shock. It was one of the most deadly attacks because of the sophistication level of the terrorists and the planning that went into the operation. Just a handful of terrorists brought down a nation on its knees for 3 days. The attacks, which began on 26 November 2008 and lasted until 29 November, killed at least 173 people and wounded at least 308. The attacks drew widespread condemnation across the world. The attacks on Mumbai are a new blow to an economy already suffering from internal problems due to global recession. And when Mumbai aches, the soreness spreads across the entire economy.
IMMIDIATE IMPACT
The immediate impact of terrorism is the loss of life, destruction of property and loss of manman-day days. s. Th Ther eree were were vigi vigils ls held held acro across ss all all of Indi Indiaa with with cand candle less and plac placar ards ds commemorating the victims of the attacks. Besides the immediate impact on the victims and their families, the attacks caused widespread anger among the Indian public and condemnations throughout the world. Shooting of Bollywood films and TV series has also been halted in the city. Two remaining one-day internationals of the seven match series between the visiting England cricket team and India were cancelled. The inaugural Twenty20 Champions League scheduled from 3 to 10 December, Mumbai being one of the host cities, was postponed. The immediate impact of 26/11 attack in South Mumbai was:(a) Reduced Reduced business business activity activity Page | 17
(b) Higher cost of doing busines businesss (c) Weakened sentiments
(d) Global scarcity scarcity of liquidity liquidity hitting business. business.
GLOBAL IMPLICATIONS
Inte Intern rnat atio ional nal reac reacti tion on for for the the atta attack ckss was was wide widesp spre read ad,, with with many many count countri ries es and international organizations condemning the attacks and expressing their condolences to the civilian victims. Many important personalities around the world also condemned the attacks. attacks. Former US President President George W. Bush said "We pledge the full support of the United States as India investigates these attacks, brings the guilty to justice and sustains its democratic way of life. Condolessa Rice, US Secretary of State, travelled to India on 4 Dec 2008 at the request of President George W. Bush in the wake of the Mumbai attacks. POLITICAL FALLOUT
On the political front, the siege of South Mumbai has already taken its toll. Union home minister Shivraj Patil -- responsible for the nation's security -- has resigned. Former finance minister P. Chidambaram has taken over that job. Prime Minister Singh has taken charge of the finance portfolio. In the state of Maharashtra, too, of which Mumbai is the capital, heads have rolled. Chief minister Vilasrao Deshmukh has been forced to resign.
IMPACT ON VARIOUS INDUSTRIES TOURISM
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The terror strikes are proving to be the proverbial final nail in the tourism coffin and body bod y blow to the tourism. Hospitality and tourism are two sectors that will be affected by terrorist attacks. Estimates sugges suggestt that that nation nationall ally y hotels hotels have seen seen about about 60% booking booking cancel cancellat lation ions. s. Holida Holiday y destinations such as Goa are feeling the pinch even more because of intelligence reports that they could be future targets for terrorists. Hotel occupancy in western India is down some 25% and rates have plunged and Gross earnings from foreign tourists are currently around 1% of GDP. There has been Rs. 4000 cr. Loss to the financial capital. The Taj and Oberoi were attacked by the terrorists terrorists which now require require an estimated estimated cost of 640 cr. For their restoration, Taj alone accounting for Rs. 500 cr. The Mumbai and Delhi have 30000rooms. 15000-18000 rooms remained empty in Mumbai and Delhi’s luxury hotels. Occupancy level is expected to go down by 50-60%. 25% cancel cancellat lation ionss in inbound inbound travel travel in first first week of dec.35% dec.35%-40% -40% dip in inboun inbound d tourism.acc to industry estimates dip in inbound tourism at 35-40%. Acc. To data from ministry of tourism , the tourism industry contributed $11.66 billion in forex earnings in 2007-08.Likely to be declined by 40% as an impact of the post terror attacks. Some executives and companies have cancelled their visit to India during that period like Glaxo Smithkline. Dell Inc. and Hewlett-Packard Company prohibited their staff from travelling to Mumbai during that period.
RETAIL INDUSTRY
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Service Service businesses businesses that thrive thrive in open spaces like malls, multiplexes, multiplexes, hypermarkets hypermarkets and restaurants also borne the brunt of the strike. The retail industry was affected during first two days of the attacks. According To Morgan Stanley report, after the terrorist strike pantaloons total sales in Mumbai declined by 4.2% week end after the attacks compared to the previous weekends compared to increase of 15.1% retail sales in rest of India. Even restaurants are providing gun-toting guards for the safety of invited guests at their wine yards and wineries.
AVIATION
There will be a short-term dip on account of terror in Mumbai but global economic crises will have far greater impact on international tourism and business. The reluctance to travel will hit the aviation sector. Many international airlines temporarily discontinued operations to Mumbai in the interest of passenger and crew safety.
INSURANCE
•
There There will will be a direct direct loss loss on accoun accountt of loss loss of life life in in case of of victim victims. s. This This will will be directly billed to respective companies who covered the lives of the deceased individuals. Page | 20
•
In the case of of assets assets [loss [loss of property property], ], there there is a terroris terrorism m risk risk mechanism mechanism..
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Ther Th eree will will be an incr increa ease sed d dema demand nd for insur insuran ance ce covers covers.. Some Some sense sense of proper proper pricing will now prevail as the pricing would be carried out in keeping with the loss experienced.
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Insurance Insurance compani companies es will will be choosy in providi providing ng cover cover for for loss loss of property property due due to terror attacks at an enhanced premium.
IMPACT ON IT, OIL AND GAS
•
The percept perception ion of incr increas eased ed risk risk in India India could could also impa impact ct the IT indus industry try,, which which depends on client visits to seal deals
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IT industry has already spread their risk; they have back-up operations in other countries such as China.
•
"Oil "Oil & gas gas and and othe otherr larg largee oper operat atio ions ns are vuln vulner erab able le to atta attack ck," ,".. Beef Beefin ing g up security will add to their costs. But these are strategic industrial assets for the country as a whole, and part of the expenditure is likely to be borne by the government.
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IMPACT ON BUSINESS
Analysts have already started giving initial estimates that suggest the loss in business due to the attacks would be about $100 billion, arising from crucial institutions, such as the stock stock exchange exchanges, s, commod commoditi ities es and money money market markets, s, and busine business ss and commer commercia ciall establishm establishments ents which remained closed. The most significant significant long term impact on the people of Mumbai- right from roadside hawker to the senior executive and indeed on urban masses on all major cities. There is also a hit of $20 billion on the foreign exchange front. Both investor and consumer confidence will have been dented by the terrorist attack on Mumbai, with overseas investors unlikely to rush back in. “Business confidence has been hit by the financial and economic crisis. The terrorist attacks will be another burden on the Indian economy. The rupee fell to an all-time low of 50.60 against the dollar down more than 20% owing to capital outflows and a withdrawal of foreign credit lines from risky markets. Mumbai brings in 40% of foreign trade, 60% of customs duty collections, 40% of income tax collections, 20% of central excise collections and $10 billion in corporate taxes. The Mumbai terror attack has been the most dramatic in a long series of terror events in India. It involved foreign hostages and places where business leaders, executives and foreigners frequented. This grabbed worldwide attention and there is certainly a negative impact on India's risk and security perception. It will dent foreign investors' views of India and this will lead to a drop in investments.
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According to recent data, in the second quarter (July-September) of 2008, GDP growth has fallen to 7.6% compared to 7.9% in the previous quarter. The growth rate in the first half of the year was 7.8%, compared to 9.3% for the corresponding period of the previous year.
The Bombay Stock Exchange (BSE) Sensex has meanwhile been hovering around 9,000, a far cry from the 21,000 it had crossed in January. The Bombay Stock Exchange and National National Stock Exchang Exchangee remained closed on 27 November 2008. The downfall of Sensex was due to outflow of FDI. The government has meanwhile cut the administered price of petrol and other petro products. The central government has also been announcing components of a stimulus package to boost the economy. The India’s trade with other countries could also be affected because of terror attacks. Exports already down by 12% in October 08 could take a further dive. Exporters claim that most of the orders have been cancelled as they have cancelled their trips to the country and directly hitting medium and small units. Our loss is gain of China and Vietnam. We are likely to lose export targets of $200 billion.
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FDI has grown robustly in first half of 2008-09 i.e., $ 19 billion against $ 7 billion in the same period in previous fiscal year. The negative sentiment after terror attack are likely to be reflected in the FII and an d FDI figures.
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STEPS TAKEN TO COUNTER TERRORISM IN INDIA ANTI TERRORIST LAWS
Terrorism is a persistent problem in India dating back in 1993. Time to time measures have been taken by the govt. to counteract it through various ordinances / acts viz. TADA, POTA. Anti-ter Anti-terrori rorism sm laws in India India have always always bee been n a subject subject of much much controve controversy. rsy. because of continuing terrorist activities, the statutes have been reintroduced with requisite modifications. The legislations in force to check terrorism in India are the National Security Act, 1980 Unde Underr this this act act the the gover governm nmen entt gets gets jud judic icial ial powe powerr to det detain ain any any perso person n who breaches security of India, for a period of 12 months.
The Unlawful Activities(Prevention) Act, 1967 . The UAPA was designed to deal with associations and activities that questioned the territorial integrity of India. However, there were many instances of misuse of power for collateral purposes.
(THE) (THE) TERROR TERRORIS IST T AND DISRUP DISRUPTIV TIVE E ACTIVI ACTIVITIE TIES S (PREVE (PREVENTI NTION) ON) ACT, ACT, 1987(TADA)
Commonly known as TADA, the act was the first and only legislative effort by the Union government to define and counter terrorist activities. It was formulated in the back drop of growing terrorist violence in Punjab which had its violent effects in other parts of the Page | 25
country too, including capital New Delhi. The Act, which was criticized on various counts by human rights organizations and political parties, was permitted to lapse in May 1995 though cases initiated while it was in force continue to hold legal validity
The Maharashtra Control of Organized Crime Act, 1999(MCOCA) Other major Anti-terrorist law in India is The Maharashtra Control of Organized Crime Act, 1999(MCOCA) which was enforced on 24th April 1999. This law was specifically made to deal with rising organized crime in Maharashtra and specially in Mumbai due to the underworld.
POTA(Prevention POTA(Prevention of Terrorist Activities Activities Act)
In 2002 March session of the Indian parliament the Prevention Of Terrorist Activities Act was introduced and it had widespread opposition not even in the Indian parliament but throughout India especially with the human rights organization because they thought that the act violated most of the fundamental rights provided in the Indian constitution. The protagonists of the Act have, however, hailed the legislation on the ground that it has been effective in ensuring the speedy trial of those accused of indulging in or abetting terrorism. POTA is useful in stemming "state-sponsored cross-border terrorism". The Prev Prevent entio ion n of Terr Terror oris ism m Act, Act, 2002 2002 (POT (POTA) A),, was was seen seen as a cont contro rover versi sial al piec piecee of legislation ever since it was conceived as a weapon against terrorism.
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SECURITY MEASURES •
We are fundam fundament entall ally y not a securi security ty conscio conscious us cultur culture. e. Until Until one actual actually ly experiences a threat, there is a tendency not to take security seriously. We look at security as an expenditure rather than an investment. Several companies and public places in Mumbai have completely overhauled their security systems like Siddhivinayak temple in Mumbai is installing more CCTVs, metal detectors and x-ray baggage machines.
•
Several companies like Zicom Electronic security system, Tops Group and Zen Technologies have offered their latest technologies to provide security systems.
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Security has become a good business in India. And overall security market is worth Rs.4000cr.
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IRDA has created a common pool for terrorism insurance.
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General insurance cos. Route the premium collected to the common pool and settle claims from the same. An insurance co must assess a property’s value, its structure and all its contents. Insurance agreement should clearly and specifically list all types of terrorism acts in the policy documents.
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Specifi Specificc terror terrorist ist covers covers are being being launche launched d as group group scheme schemess with with limite limited d benefits and cheaper cost.
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When it comes to terror companies have to look at all three aspects- prevention, reaction and resumption. Prevention otherwise is the responsibility of the state but terrorists can be deterred by implementing strict security, educating employees about the same. Every person from junior most service employee to the senior most manager should be subjected to same level of security. Companies should audit both crises plan and resumption plan either virtually or through practice.
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CURBING FUNDING LINES
Even as India plans to beef up its security and surveillance system it is equally important to choke the funding lines to the terror organizations. Terrorists find many sources of money. Some sources of terror funding are: •
Foreign governments
•
Charitable organizations
•
Financial markets
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Legitimate business fronts
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Various forms of international trade
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Crimin Criminal al activi activitie tiess such such as extort extortion ion,, video video piracy piracy,, prosti prostitut tution ion rings rings & drug drug trafficking.
In south Asia, the heroin and drug trade is one major source of terrorist financing. India is yet to make any progress in identifying such sources. Indian safeguards:•
Prevention of Money Laundering Act 2002
The Prevention of Money Laundering Act, 2002 (PMLA 2002) forms the core of the legal framework put in place by India to combat money laundering. PMLA 2002 and the Rules notified there under came into force with effect from July 1, 2005.
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The PMLA 2002 impose impose obligation obligation on banking banking companies, companies, financial institutions institutions and interm intermedia ediari ries es to verify verify identi identity ty of client clients, s, mainta maintain in record recordss and furnis furnish h information to FIU-IND. PMLA 2002 defines money laundering offence and provides for the freezing, seizure and confiscation of the proceeds of crime. •
Financ Financia iall Inte Intelli llige gence nce Unit(F Unit(FIU) IU) set up in Novem Novembe berr 2004 2004 to inves investig tigate ate suspicious transactions.
FIU as the centra centrall nation national al agency agency is respon responsib sible le for receiv receiving ing,, proces processi sing, ng, analyzing and disseminating information relating to suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes. FIU-IND is an independent independent body reporting reporting directly to the Economic Intelligen Intelligence ce Council Council (EIC) headed by the Finance Minister. •
RBI, SEBI, IRDA Have Anti-money Laundering and Know Your Customer (KYC) guidelines.
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Banks and FIIs to report cash transactions involving more than Rs. 10lakhs , forged or counterfeit currencies or other suspicious transactions.
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HOW OTHER ECONOMIES FOUGHT TERROR
US
The US tragedy of 9/11 by Al-Qaida terrorists which used airplanes as missiles brought down two of the larger buildings in the world severely damaged the Pentagon and killed 3,025 people. Those attacks wiped out 200,000 jobs, busted 80,000 small businesses and raised $16 b worth of buildings, besides forcing a week long-shut down of o f Wall Street. The insurance and airline industries were the worst hit, and property and casualty claims mounted to $40 b. air services were cut back 20%, 100,000 airline jobs were cut. Within mere hours after the attack, the US Federal Reserve launched a rescue package by infusing $ 100 b into the economy everyday for 3 days. The Bank of Japan and other central banks across Canada and Europe were mobilized into supporting the dollar and easing the flow of money across money markets. Federal loans, grants and industry-specific bailouts followed. A week later, when Wall Street reopened and trading resumed on the NYSE, the Fed dropped interest rates by 0.5% to spur growth. With 3 more cuts it brought the rates down to 1.75 1. 75 % by Dec.2001. US Airlines received a $ 15 billion – aid package and small businesses which were adversely impacted by the attacks were given loans and grants. Plus, the city of New York was given $21.7 b of federal aid.
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UK
July 7, 2005 central London was bombed. Underground trains and double Decker bus were the targets killing 52 , injuring 700 people. There was little economic impact •
Bank of England kept rates unchanged to avoid panic.
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London Metal Exchange shut for a day.
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20% more shoppers in central London the very next weekend.
•
•
No drop off in hotels Less than 0.5% of GDP lost.
ISRAEL
Various Terrorist attacks have also taken place in Israel. Some steps taken by Israel to deal with terrorism:-
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At hotel hotelss and and rest restau aura rant ntss ther there’ e’ss alway alwayss an arme armed d guar guard d along along with with meta metall detectors and many restaurants charge a small fee for security services.
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The major advantage with Israeli corporate citizens is that all of them have served a stint in the armed forces. While adult males serve a minimum of three year tenure, females serve a minimum of 18 months.
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There’s an act in Israel which compensates companies which are victims of terror attacks – the Property Tax and Compensation Act 1961.
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SUGGESTIONS
Security of citizens is a cornerstone of any democracy, along with liberty and equality. Repeated terror attacks have undermined und ermined citizen’s security. Not just that, it has eroded the citizen’s faith in the state’s ability to provide security. When the terror struck Mumbai in November 2008 was when government took some positive security measures after some dithering. The setting up of National Investigation Agency Agency and making making the existi existing ng anti-t anti-terr error or laws laws toughe tougherr are likel likely y to change change the scenario. There should be a separate compensation law for the victims of terrorist attacks. All the wings of armed forces should come forward to combat terrorism. Efforts should be made to prevent funding of terrorist activities. The Multi-Purpose National Identity Card (MNIC) scheme is another measure. The card includes an individual’s biometrics and fingerprints. Government should also provide every citizen a Unique Identity Number.
CONCLUSION
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Terror Terrorism ism is a malady malady that that has gripped gripped the entire entire world world commun communit ity y infli inflicti cting ng econom economic, ic, social social and cultur cultural al losses losses on the affect affected ed countr countries ies.. There There have been repea repeate ted d terr terror oris istt atta attack ckss of the the same same dime dimens nsio ions ns part partic icul ular arly ly in US, Iran, Iran, Afghanistan, India, etc. These attacks will have a huge impact on long term economic growth. Terrorism Terrorism cannot be controlled controlled by a country country individuall individually y but rather efforts of entire entire world community through the specialized institutions like UNO have to be ushered in. Everyone should come together and help fight against terror. Individual efforts to counteract terrorism have to be supplemented by International support by the affected countries. Boundaries of terrorism are increasing day by day. All-round efforts are needed like enhanced electronic surveillance at the international airports, sea routes, industries, atomic installations, hotels, tourist resorts. All the wings of armed forces should come forward to combat terrorism on a war foot footin ing. g. Conc Concep eptt of insu insura rance nce has has to be reva revamp mped ed to help help the the mish mishap ap vict victim imss psychologically and financially. On the political front efforts have to taken to prevent money laundering , funding of terrorist activities by religious fanatics to prevent diversion of funds, prevention of smuggling activities and drug trafficking. Ulti Ultima matel tely y the the timi timing ng of the the terr terror or atta attack ckss with with the the econ econom omic ic slowd slowdow own n is an unfortunate double whammy for India.
BIBLIOGRAPHY
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MAGAZINES: •
Business Today, Volume 17, No.26, December 2008
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Corporate India
NEWSPAPER: •
Times of India, 17th March 2009, “Where security is a paper tiger”
INTERNET: •
wikipedia.org/wiki/Terrorism
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wikipedia.org/wiki/Terrorism_in_india
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www.livemint.com/2008/11/28001033/Only-shortterm-impact-on-Indi.html
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knowledge.wharton.upenn.edu/india/article.cfm?articleid=4339
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