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Sunday, February 19, 2006

Bird flu and its possible impact in Indian economy

Bird flu has struck India at a small scale right now. It is yet to become a major cause of concern for the country. However, there are signs that the Indian government and the people are taking this threat more and more seriously. Already, there has been a huge initiative to cull out thousands of chickens in order to prevent the flu from spreading all over the country. Right now, the main affected area is the western state of Maharshta. The economic impact of this crisis has not still been measured but it is likely to cause serious damage to the Indian economy in several sectors if the flu spreads in other parts of the country.

Naturally, the first and direct victim of the crises will be the poultry industry. Indians are one of the largest consumers of poultry food in the world. In egg production India is the fourth largest country and in case of The annual turnover of this industry is nearly $6.76 billion and more than 5 million people earn their livelihood. No substantial attempt has been made so far to estimate the loss incurred by the industry due to the bird flu crises. The leaders of Poultry Federation of India are trying their best to minimize the loss. They have expressed their optimism that the worst is over and the crises has almost passed India but not everyone is so optimistic. The price of chicken has decreased significantly in many parts of India and if this trend continues then it will adversely affect thousands of poultry entrepreneurs and farmers.

Export potential of this industry is going to be damaged like the local demand. In recent time, Japan showed interest in importing poultry products from India. Naturally, this export possibility will suffer a serious setback. Neighboring Bangladesh has taken strong measures to stop entrance of any Indian poultry products in the country. Nepal is walking in the way of Bangladesh too. Thus, India's export in this sector is going to suffer a lot in the coming days.
After the poultry industry, tourism is going to suffer in Indian economy. India is one of the most attractive tourist destinations in the whole world. Now is the peak season for the country's tourism industry because it is the spring time in most parts of the country and the weather is lovely- not hot or cold too much. Since it is just early days for the bird flu in India, tourism is yet to be affected but if the crisis continues then tourism can suffer same way like the poultry sector. If any considerable decline of the arrival of foreign tourists happens that would effect the airlines industry too. Around half a million tourist came to visit the country in January 2006 which is more than 15% higher than January of 2005. More tourists mean more foreign exchange and more employment for the local people. Indian airline industry is growing at a very fast pace too because of the recent economic boom.

The news of bird flu has caused a fall in demand the poultry products. People will tend to buy more mutton and fish to meet their demands of protein. This is certainly not very good news for a country with more than 1 billion people. Maharastra is one of the most developed provinces of India. Mumbai (previously known as Bombay) port, stock exchange and the main cinema industry (better known as Bollywood) are situated in this province. Disruption of daily life in Maharastra can have serious impact on the overall economy of the country.
It is still very early to say whether Indian economy would suffer a serious setback or not for the current bird flu crisis. However, this crisis only reminds us of the constant uncertainty of international business as well as the need for taking better care of our environment. India is a very poor country and is really ill equipped to face an emergency situation if the flu spreads to human beings in large scale.

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