Share, asset prices may further fall: World Eco Forum

New Delhi, Nov 13 (PTI) With the impact of global financial crisis on India still unfolding, share and asset prices in general as well as balance sheet of financial institutions could decline further, says World Economic Forum (W.E.F.).

"India remains vulnerable to the vagaries of the world
currency, commodity and financial markets," said W.E.F., which
will hold a three-day India Economic Summit in Delhi from
November 16, in its report.

However, in the long run, all the indicators of Indian
economy point to sustainability of growth rates, said the
report "India@Risk", quoting earlier International Monetory
Fund (I.M.F.) projections of 7.9 percent and 6.9 percent for
2008 and 2009, respectively.

I.M.F., however, further scaled down Indian economic
growth outlook to 7.8 percent and 6.3 percent for these two
years.

In fact, other agencies have also revised down their
projections for India's economic growth. Economic Advisory
Council to Prime Minister also said the Groos Domestic Product
(G.D.P.) could be around 7 percent for the current fiscal
against 7.7 percent projected earlier.

W.E.F. said shrinking global economic growth could pose a
challenge for Indian economy through further fall in share and
asset prices as well as reducing balance sheets of financial
institutions.

The report added the crisis will also affect remittances
to the country as most of them come from the US and Canada.

Already, the crisis has wiped off around USD 57 billion
from the Indian economy for the first seven months of this
fiscal, according to the latest figures from the Reserve Bank
of India.

India's Industrial growth partly rebounded to 4.8 per
cent in September after a dismal 1.4 percent in August, but
analysts fear that October onwards, it would again fall
drastically.

The W.E.F. report said sluggish demand from developing
economies might affect Indian exports in the coming quarters.
Even though it said that Indian exports for 2007-08 exceeded
USD 155 billion, the latest figures showed that exports fell
by 15 percent in October.

Referring to the risk India faces in the energy sector,
the report said increasing oil prices and consumption would
add more pressure to the current account deficit of the
country.

The production in crude oil has been stagnant, leading
to more dependence on crude oil imports. India imports more
than 70 percent of its oil, the report added.

However, oil prices have started softening from USD 147
a barrel in July to a 20-month low at USD 56.16. In fact,
falling global crude prices pulled down India's inflation to
single digit after around five months, even though the
administered petroleum prices have still not been cut.

The report added that a revision of energy subsidies is
important as subsidies discourage efficient use of energy and
diminish incentives to increase use of clean energy sources.

Stressing on the growth of agriculture, the report
pointed out that the economic growth of the country is not
benefitting the rural population, which is highly dependent on
agriculture.

It said the agricultural output and rural communities face
risks of changing weather patterns, water scarcity and
quality.

Despite current self-sufficiency in food production, the
report added, approximately 25 per cent of India's population
is malnourished and dwells below the poverty line.PTI SHS