How Does Terrorism Affect an Economy?

What is Terrorism?
Terrorism is not new and even though it has been used since the early times of recorded history, it can be relatively hard to define terrorism. It is not an ideology like communism or capitalism. Rather, terrorism is a tactic – a strategy used to achieve a specific end.
Terrorism is often used when a weaker person, or group, is fighting against a powerful nation-state. The violence is aimed at creating fear in the targeted population and often provokes a prompt and violent response from the state. Terrorism is, in its broadest sense, the use of intentionally indiscriminate violence in order to achieve a political, religious, or ideological aim.

Effect of Terrorism
Besides the injuries and deaths immediately brought about by terrorist attacks, survivors often suffer from post-traumatic stress disorder, anxiety, and major depression.  The economy suffers an immediate impact due to building and infrastructure damage, but it also suffers long-term effects from trauma to financial markets, a rise in spending on security and defense, and the impact on supply chains of enhanced security at land, sea and air border crossings.

Terrorism in India
Terrorism in India, according to the Home Ministry, poses a significant threat to the people of India. Terrorism found in India includes ethnic-nationalist terrorism, religious terrorism, left-wing terrorism, and narco-terrorism. The regions with long term terrorist activities have been Jammu and Kashmir, east-central and south-central India (Naxalism) and the Seven Sister States. In August 2008, National Security Advisor M K Narayanan has said that there are as many as 800 terrorist cells operating in the country.
As of 2013, 205 of the country’s 608 districts were affected by terrorist activities.  Terror attacks caused 231 civilian deaths in 2012 in India, compared to 11,098 terror-caused deaths worldwide, according to the State Department of the United States; or about 2% of global terror fatalities while it accounts for 17.5% of global population.

Effects of Terrorism On Indian Economy
With India facing the fourth largest number of terror attacks across the world in 2013, such incidents have a significant and long-lasting negative impact on the economy, according to Moody's Investors Service. "More than 60% of all terror incidents in 2013 were concentrated in just four countries: Iraq (24%), Pakistan (19%), Afghanistan (12%) and India (5.8%)," it said in a report. 
World in recent past has witnessed several economies burning with disaster & crisis. Today every nation faces some of the other economic, social or communal unrest. Further, globalization has enabled the impact of these tremors to be felt even at remotest part of the world.
Many believe that terrorism can't hamper one’s economic activity as it only destroys a small fraction of the stock of capital of a country. However, a broader look at the geopolitical & economic scenario can easily erode this misconception.
India has been facing the terrorism threat as long as since 1970. Over this period of time, terrorism has severely affected the Indian economy.

Let’s not forget that the enemies of our nation have vowed to bleed India through thousand cuts. Even if terrorism represents a small fraction of the overall economic risk in India, it may have a large impact on the allocation of productive capital across the country.
In any part of the world, terrorism is unwanted as it not only kills the human life but also the infrastructure, industry ultimately shackling its overall growth.


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