The Hindu Business Line : Tsunami: Beta group chief sees no major economic fall-out

THE damage caused by the cataclysmic tsunami in the coastal areas of a number of countries in South-East Asia, Sri Lanka and India is not going to have a "major economic fall-out" in terms of production-disruption. On the other hand, the disaster will hit Government finances harder, says Mr Rajmohan Pillai, Chairman of the Rs 2,200-crore Kerala-based Beta Group, which has business operations in Sri Lanka and Thailand.

"It will be more a story of human tragedy rather than economic costs," he said, adding that while some near-term impact was inevitable, growth rates would not dip.

The Beta Group, which has diversified business activities, including cashew, agri-products, bulk cargo handling, readymade garments, entertainment and exports-imports, feels that the tsunami disaster will be more localised than anything else and that areas that have been witnessing production-growth seem to have been protected. Mr Pillai said that the damage appears to have occurred in areas that are not well developed.

In India, for instance, the metals industries are located in the middle and east of the country, where there has not been any damage worthy of notice. Similarly, petrochemicals and fertiliser plants have been unaffected because they are located largely in the western region.

The automobile industry may have suffered some losses because several units are located around Chennai. But the southern region is emerging principally as a services dominated area, which is not hardware intensive. The region's economy should bounce back quickly, he said.

There could be some slippage on the federal fiscal front because of higher expenditure and possibly lower fiscal revenue collections from the affected areas. But there will possibly be no slowdown in economic growth due to the tsunami disaster.

However, he said: "Some industries in the southern belt, the growth of which is closely linked to discretionary expenditure by the manufacturing sector, will receive a setback."

The tourism sector in Thailand, which accounts for 6 per cent of that country's GDP, is unlikely to suffer lasting damage. There is no denying the fact that the tsunami has hit tourism-related stocks and rattled the baht, but, Mr Pillai said: "The impact is expected to be smaller than that flowing from the SARS scare, or this year's political violence in the south of the country. In fact, Thailand is one of the biggest rice producing and exporting countries. No disruption to shipments of the grain has occurred. Most shipments are from the country's northeast, an area not affected by the tsunami." As far as Sri Lanka is concerned, Mr Pillai felt that the disaster would set back the island's economy by a year and might even result in negative growth in the next quarter. Sri Lanka logged a record 5,00,642 tourist-arrivals in 2003, and was hoping to double the number by 2010.

But the tsunami in Sri Lanka, killing several thousands and making hundreds of thousands homeless, has destroyed transport links from Colombo to the main tourist destinations in the south of the island, where a string of luxury hotels has been badly damaged

Although the tsunami has devastated parts of Asia, he said shipments of oil, metals and agricultural products around the Indian Ocean have escaped damage.

Well-protected ports and oil refining operations have been largely unaffected, while major rice and soya meal producing areas are located inland. However, he feared that shipments of rubber from Indonesia may be affected because of the damage to road and railway links along the coast, Mr Pillai said.

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