BOMBAY, 5 May 2003 — Two weeks ago, the entire world was glued to its television screens watching the Iraq war. But unaware to all, there was a deadly virus creeping behind us and it has now relegated the war and Saddam to the background.

Severe Acute Respiratory Syndrome — SARS — was a word which did not exist two months ago. Like AIDS, SARS is another four-letter word which has caused havoc and panic in Asia — especially Southeast Asia. Asia’s IT market is forecast to grow 7.6 percent to $77 billion in 2003. But this figure could shrink due to poor demand from the outbreak of SARS.

A steel industry delegation of Indian Steel Alliance had to cancel its China visit this month and Confederation of Indian Industry (CII) is unsure of going ahead with the visit of a CEO mission to China in October. Air-India has suspended all flights to Singapore and Kuala Lumpur from Delhi. Air-India’s flights from Bombay to Singapore and Kuala Lumpur may also be chopped.

What is reassuring is that India’s most globalized industries like software services and business process outsourcing seem to be relatively unaffected so far. In fact most of the Indian companies in Singapore are functioning normally. There is no doubt that SARS has caused immense damage to the Asian economy. Morgan Stanley has reduced GDP growth rate for Asia (excluding Japan, Australia and India) by 0.6 percent due to SARS.

It is also estimated that the global economy will bear an estimated loss of about $30 billion. World economic growth projections have also been scaled down to 2.3 percent for 2003 from earlier forecasts of 2.8 percent. The worst hit has been the airline and tourism industry. SARS has left tour operators with a 25-30 percent drop in international bookings. Forward bookings from India to Southeast Asia have dropped 55-60 percent for May-June 2003, compared to last year. Travel to Hong Kong has been the worst affected, with no bookings coming in for the forthcoming holiday season.

According to the FICCI report, the Japanese airline (ANA) has reported one fifth fall in passenger traffic between Tokyo and Hong Kong. Hong Kong and Singapore have also been badly hit as these countries reported a 61 percent decline in visitors in the first half of April.

While Singapore Airlines announced effective grounding of 13.5 percent of all its flights, Cathay Pacific has indicated that it may ground its whole flight next month due as operations are unviable due to decline in number of passengers.

And for the hospitality industry, FICCI said that in March, hotels all across Asia experienced a decline of 4.6 percent in revenue per available room in terms of US dollar, which was as high as 16.8 percent and 15.4 percent in Hong Kong and Singapore.

But in all this, one positive fact noticed was that domestic travel has picked up in India, with most Indians opting for holidays closer home than venturing out to the usual favorite shopping destinations like Singapore, Hong Kong, Malaysia and Indonesia. Instead they are heading for holiday destinations inside the country.

This is the peak holiday season as most of the schools and colleges are closed for the annual holidays.

Almost 30 percent of the Indian tourist traffic shifted to Uttaranchal, Himachal Pradesh, Kerala, Sikkim. Domestic airlines have also joined the fray with Jet Airways introducing holiday packages with tickets bought under its advanced purchase excursion (Apex) scheme. Air Sahara has also tailored its existing schemes to attract Indian tourists. Indian Airlines is likely to follow.

And there are many, the die-hard optimists, who feel that this SARS virus in China is a golden opportunity for India to race ahead and grab more share of the pie. They feel that buying will significantly shift from China to India.

Well, these coterie of people have obviously not given thought to the fact that India too could be affected.

There are sporadic cases of SARS being reported from various parts of India and in a country like India, with its ramshackle medical facilities, if this is virus spread is left unchecked, it could take disastrous proportions.