MUMBAI: From being one of the most preferred investment destinations, foreign funds are slowly moving out of India as growth has slowed in the government’s fight against double-digit inflation.
The US sub-prime crisis, followed by soaring in crude oil prices, has left the Indian stock markets bruised in the last six months.
The recent recovery, on cooling of oil and dollar’s newfound strength, has suffered with India's inflation peaking to 12.44 per cent and signs of a global slowdown rising.
ECONOMICTIMES.COM spoke to Mr. Kaushal Sampat, chief operating officer of Dun & Bradstreet India , on the factors that be and need of the hour.
Q. How far reaching has the impact of US sub-prime crisis been on India? How long do you see the impact continuing?
A. Since India has very little exposure to the US mortgage market, the direct impact of the sub-prime crises has been very limited. However, the credit crunch in the global economy and increased risk aversion of global investors has increased the volatility of financial flows to Indian economy. From a stock market perspective, FII investments into India have been impacted by conditions in overseas economies.
Given that the impact of US sub-prime on the global economy is still to completely unfold, it would be difficult to state the magnitude and duration of its impact on the Indian economy.
Q. PM's Economic Advisory Panel has projected GDP growth of 7.7% and inflation to touch 13%. Do you see it differently?
A. D&B expects inflation (as measured by the WPI) to touch 13% by Sep ‘08 and remain elevated and in double digits till December. However, on the GDP front, we are slightly more optimistic, and expect it to grow at 8% in FY09. This is because while industrial production is expected to slowdown significantly, the services sector is expected to do relatively better and experience only a slight moderation. The revival of monsoon may aid prospects for agricultural output as well.
Q. Where do you see inflation by March end?
A. The fiscal measures initiated by the government to augment supply and contain inflationary pressures are expected to yield results around December and inflation is likely to come down to 8-9% range by March ’09.
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D&B's Sampat sees inflation at 13% by Sep, GDP to grow 8% FY09- Interviews-Opinion-The Economic Times
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