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Riots may hurt Gujarat worse than 2001 quake

Reuters

Posted: Mar 12, 2002 at 1757 hrs IST

The riots in Gujarat that has left more than 700 dead may prove more economically ruinous than the earthquake that devastated the same region last year. The devastation wrought by the natural calamity–which flattened thousands of buildings and entire villages in Gujarat, killing 30,000 people and wreaking $4.5 billion in damage—ended in seconds. And the destruction was limited to a single region.

By contrast, the man-made disaster raging the past two weeks across India's second-most industrialised state, threatens to harm the national economy by igniting religious passions that could fester—and periodically explode—for years to come.

The rioting in Gujarat directly threatens economic activity in one of India's most prosperous regions. Gujarat has attracted lots of investment the past 20 years as capital fled other states where conditions have deteriorated in the wake of violence triggered by a multitude of other causes. Caste warfare and tribal disputes have turned much of north-east and central India into an economic blackhole.

Gujarat, which now accounts for 6.5 per cent of India's GDP, profited mightily from the misery of those areas. Of the total invested nationwide in the 10 years to last August, Gujarat alone attracted 15 per cent, the second-highest amount behind Maharashtra, a neighbouring state. But the state is estimated to have lost five billion Rupees each day as mob violence, arson and looting brought business there to a standstill. The riots have now subsided. But the Gujarat Chamber of Commerce and Industry estimated the loss to trade and industry at 22.5 billion Rupees ($462 million) as of last weekend.

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