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.
“India remains vulnerable to the vagaries of the world currency, commodity and financial markets,” said WEF, 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 IMF projections of 7.9 per cent and 6.9 per cent for 2008 and 2009, respectively.
IMF, however, further scaled down Indian economic growth outlook to 7.8 per cent and 6.3 per cent 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 GDP could be around 7 per cent for the current fiscal against 7.7 per cent projected earlier.
WEF 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.