The Mumbai terror attacks would hit foreign investors' confidence and slow down foreign direct investment inflow into the country, former UN Under Secretary General Shashi Tharoor said.
Though the impact of the global meltdown would not be 'drastic' on India's economy, its recovery would be 'stretched', with the slowdown of FDI inflow, he said, delivering the Fedbank Hormis lecture on 'The Global Financial crisis and India's incomplete transformation' in Kochi on Tuesday, organised by Federal Bank.
He said the fundamentals of the Indian economy were strong, value of exports was only 13 per cent of GDP and the share of foreign finance capital in the economy was marginal.
Observing that the clamour for military action against Pakistan as a response to the Mumbai terror attacks was 'dangerous', he praised the political leadership's response, for staying 'calm, measured and focused, without going into a kneejerk reaction.'
He said India and Pakistan were nuclear powers and a war on Pakistan would lead to disaster for both the countries.
The former diplomat and author said there is need to wage a war on the 'daily terror' of poverty besides illiteracy and ill health.
The policies, he said, should take the benefits of the economic growth to the bottom one fourth of the population.