The economic effects of terrorism are disastrous for individual, trade and commerce and national economy as a whole. 

These can be listed as under:

• Terrorist acts destroy the houses and property of individuals. The families of persons killed/injured during the terrorist violence suffer for the whole lifetime.
• Terrorist acts disrupt normal trade and business which results in loss of income.
• In terrorism infested states like Jammu and Kashmir, businessmen migrate to the other parts of the country.
• Tourism industry has suffered a great deal in Jammu and Kashmir due to continuous terrorism. In fact, a number of countries have issued advisory to their citizens not to travel to India.
• Industrialists, businessmen and their children are kidnapped by the terrorists also extort money from business and industries.
• Manufacturing activities along down of completely stop when industrial establishments are attacked by the terrorists.
• The railway lines, radio stations, roads, bridge and the government offices are destroyed. Crores of rupees are spent on reconstruction. In addition, the transport activities are disrupted. Besides this, the government has to spend crores of rupees for the safety and protection of these public premises.
• Terrorist organizations indulge in drug trafficking and black marketing to raise funds for their acts of violence.
• The overall effect is harmful for national economy as the process of economic development slows down.