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Private fund flows to India set to plunge

Private non-banking lending to India this year is expected to come down to $1 billion from $5 billion last year, according to the Annual Report of the Institute of International Finance.

"Private non-bank lending to India is likely to moderate this year to around $1 billion from $5 billion last year, if the previous year's non-resident Indian bond issue is not repeated," it said.

Net private capital flows to emerging market economies are also projected to fall to $140 billion this year, down from $168 billion last year, the report said. This would reduce private flows to their lowest level since 1992.

The expected fall in private flows from last year, it said, was entirely on account of direct impact of an expected outflow of private capital from Turkey and much weaker net flows to Argentina.

Aggregate growth in emerging market real gross domestic product is expected to slow to 3.5 per cent this year from 5.7 per cent last year.

Growth in China is likely to hold up much better at around 7.5 per cent and in India around 6 per cent, the report said.

Oil prices, the report said, appears to have settled in a range around 25 dollars for most of the year, after falling fairly steeply at the beginning of the year.

However, if demand were to fall more steeply than currently expected as a result of the global slowdown activity, OPEC coherence and discipline might be threatened.

In that event, prices could break out of current ranges and a fall below 20 dollars a barrel could not be ruled out, it added.

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