India counts economic cost of riots

Soldier on patrol in front of burning shops in Gujarat

Hindu-Muslim violence in India's Gujarat state earlier this month has taken a heavy toll on the economy of one of the country's most prosperous and industrialised regions.

Textile firms have defaulted on overseas commitments and are losing business by the day

Vipin Patel
Vatwa Industries Association

The sectarian riots, which claimed about 600 lives, and came as Gujarat was recovering from a prolonged drought and a devastating earthquake in January 2001 which killed more than 20,000.

All major sectors - petrochemicals, textiles, auto industry and real estates - were badly affected.

"Gujarat's economy is suffering a daily loss of about 3bn rupees (£45m; $64m)," said RP Gupta, former chief of the Gujarat Chamber of Commerce and Industry.

"After the drought and the earthquake, the economy was showing signs of recovery but they have been extinguished by the riots. It was a deathly blow."

Industrial standstill

The state's top sectors - petrochemicals and textiles - suffered as most national highways were closed by curfews.

Curfews have damaged businesses

"There is a short supply of fuel and most industries are closed," said Vipin Patel, chief of Vatwa Industries Association.

"Textile firms have defaulted on overseas commitments and are losing business by the day.

"If one takes into account the overall loss for textiles by the end of the month then it would top 30bn rupees," Mr Patel added, predicting that the local economy would take at least two months to recover.

Production cutback

Production at a local General Motors plant has been cut by about 20% after it was the focus of some of the riots.

A company official said it was an "uncompetitive situation" and that no cars had been despatched in the past five days.

"We will not be able to produce the targeted 1,300 cars this month," Rajiv Chabba, a GM marketing official told the Economic Times newspaper.

Investment in Gujarat's real estate market, which is still recovering from the earthquake, has dropped-off after the looting and burning of business premises.

Insurance companies have so far received claims totalling around 460m rupees, but that figure expected to rise significantly.