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Mumbai Attack Tests City's Reputation for Resilience

The vibrant seaport city, Mumbai, in southern India, usually is quick to bounce back from catastrophes like bombings, communal riots and monsoon floods. But the most recent terror attack is testing its reputation for resilience. Mumbai is limping back to normal, as it mulls terror's economic impact.

Most people are unable to get close to the location of the Bombay Stock Exchange unless they work for one of the companies inside and can make it past the gauntlet of security checks. Security has been increased since last month's attack, especially because the exchange was on the attackers' list of targets.

Many residents still reeling from attack aftermath

For many in the stunned city, the three-day siege seems to have crossed a line. It seems to have targeted some of the most visible - and apparently vulnerable - symbols of India's prosperity, just as the nation's economy was slowing down.

Gaurav Dua, a senior researcher at Sharekhan - one of the trading companies at the exchange - says the latest attack, combined with the global credit crunch, has been a painful one-two punch to India's economy.

"The timing of the attack was really unfortunate for India," Dua said. "The uncertainty is not good for business and it will have an impact on the growth in India. But I think this will be a short-term phenomenon."

Stock exchange plunges

The stock exchange opened briefly during the three-day siege, partly as a show of patriotic defiance. But investors apparently were not feeling as patriotic. The market quickly shed three percent of its value; not that it was doing so well before the attack.

India's stock market has lost more than 30 percent of its value, this year. Analysts say India's growth rate is headed for a seven-year low of six percent.

Tourism industry impacted

Among the first to feel the pinch is the tourism industry. Since the attack, it has slowed to a trickle, spelling trouble for the more than 40 million people who depend on it for their livelihood. Hotels across the country are seeing a rash of cancellations. And, that is affecting spin-off businesses like restaurants, travel agencies and craft shops.

But market analysts say the attacks could scare off more foreign investors and business leaders - the very people who helped spur India's record growth for the past several years.

"Unless the issue of security is adequately addressed by India, all our ambitions - including our expectations of sustaining seven and eight percent growth rates - will be jeopardized by violence and terrorism," said Ajay Sahni, the Center for Conflict Management in New Delhi director.

To calm India's jittery market the government set aside $8 billion this week in a stimulus package, but many here question whether that will be enough to stop the country's downward slide - a slide that many analysts say has been accelerated by the latest terror attack.

Will terror attacks scare off investors?

India's commerce minister has tried to allay market fears, saying most foreign investors already take into account that terrorism can strike anywhere in the world.

But it appears to strike with surprising regularity in India, with eight terror attacks since May. In the past four years more people have been killed by terror attacks in India than in any other country except Iraq.

That, Ajay Sanhi says, cannot be good for India's economy.

For now, in Mumbai, music concerts and movie premiers still are being postponed or canceled, Islamic Eid celebrations have been muted, and cricket matches - almost a religion here - are being moved to other venues.

Mumbai - as well as the rest of the country - appears to be slow to return to normal, especially in the face of rising tension between India and Pakistan, where police investigators say the attack was organized.