‘Economy bowed but not broken’

MUMBAI, FEB 4: India’s devastating earthquake that took such a terrible toll in human life is unlikely to hit its economy anywhere near as hard, economists say. In fact, if Turkey and Taiwan which both suffered big earthquakes in the last two years are anything to go by, its economy should handily weather the crisis but not without some short-term pain. Economists cautioned that the task of counting the human and financial costs of rebuilding Gujarat, India’s second most prosperous state, was only just starting.

The Gujarat state government doubled its damage estimate on Saturday to more than Rs 200 billion ($4.3 billion), slightly less than two per cent of national GDP. After expanding more than 7.5 per cent for three straight years in the mid-1990s, the economy slowed to a 6.6 per cent pace in 1998/99 and 6.4 per cent the following year. This year, private economists expect growth to ease to 6.0 per cent or lower. Economists say the quake has ruled out chances of a soft 2001/2002 budget to kickstart the economy.