Here are some political, economic and geopolitical scenarios for India after the attacks in Mumbai: Politics The Congress-led government faces several state elections and a general election in early 2009. Many analysts expected it to fare badly before the Mumbai attacks, with voters frustrated at rising prices and an economic slowdown. There has also been growing anger at bombings in Indian cities this year, which has sparked criticism from the main Hindu-nationalist opposition Bharatiya Janata Party (BJP) that the government is soft on terrorism. The state elections are testing the political waters ahead of general elections. The state polls are also important because success would give either party more leverage for securing alliances with smaller parties before the national poll. The Congress-led government could be punished in the polls if voters blame the government for being soft. The attacks could play into the hands of the BJP, which has made being tough on terrorism one of its major campaign planks. One state election, in Madhya Pradesh, was held during the siege. Turnout was higher than expected, perhaps suggesting the Mumbai attacks have motivated voters to participate. Results of that vote are not yet known. Indians could rally around the government, as can happen in times of crisis. A firm stand by the government, perhaps taking some kind of diplomatic or symbolic action against Pakistan, may win over Indians. With Islamist militants claiming responsibility for the attacks, communal politics could also become an election issue. There could be a backlash against India's minority Muslims by radical Hindu groups. There have been reports that Hindu militants have already carried out bombings this year in revenge for suspected Islamist attacks. The economy The economy is already slowing and the pace of growth is expected to decelerate further due to high interest rates earlier in the year and the global financial crisis, which could dampen demand and hurt investment spending. Analysts say the coordinated attacks could hasten the pace of monetary easing as policy makers could try to counter negative sentiment generated by the incident. The central bank expects the economy to grow 7.5-8 percent in the fiscal year to March but many private sector economists see it expanding about 7 percent, much lower than the sizzling growth of 9 percent or above recorded over the last three fiscal years. Analysts say the attacks are likely to have a temporary effect on tourism and may shake investor confidence. The government's response to the rising threat of attacks is also seen as crucial to investor confidence, with a soft approach potentially damaging to foreign direct investment (FDI). FDI rose 137 percent to $17.21 billion in April-September and the government expects it to exceed $35 billion this fiscal year. Pakistan relations In 2001, India blamed Pakistan for a militant attack on its parliament. The incident led to a tense stand-off between the nuclear-armed neighbors, with both armies facing each other “eyeball to eyeball” across the frontline. Tensions have already risen this time, with India blaming Pakistani-linked elements for the attacks. Pakistan has responded by accusing New Delhi of playing politics. While it would be a shock if Pakistan's government were implicated in these attacks, analysts say the involvement of members of the Pakistan's spy agency cannot be ruled out.
