The Polish player enters another chapter in his career at this week’s LIV Golf Singapore
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Tight monetary policy triggered by high oil and commodity prices, and global market turmoil will combine to moderate growth, Prime Minister Manmohan Singh's Economic Advisory Council said in its economic outlook for the 2008/09 financial year.
Asia's third-largest economy is estimated to grow 7.7 percent in the year to the end of March, below a recent forecast from the central bank. India's economy has grown by an average of 8.8 percent over the past four years.
But the report added that to trim inflation to 8 to 9 percent by the end of the fiscal year, from around 12 percent presently, the central bank would have to maintain a tightening bias.
"The downside risk to our growth expectations in 2008/09 is primarily from a further deterioration in global conditions with its attendant impact on India -- be it in the sphere of oil prices or capital markets," the panel said in its report.
Adverse global economic conditions were also expected to widen the current account deficit and pressure the fiscal system through rising subsidy bills.
A majority of analysts expect growth in India to slow as policy makers struggle to fight rising prices by raising interest rates, tightening liquidity and cutting import duties.
The central bank in its monetary policy review last month cut the growth forecast to 8.0 percent from 8.0-8.5 percent previously, but its prediction is still above many private banks' outlook for the Indian economy.
Slowing growth
In its last report under the leadership of outgoing chief C. Rangarajan, a former central bank governor, the panel said coordinated policy action at home, cooling commodity prices and action by other central banks could help bring India's inflation rate down to 8.0-9.0 percent this fiscal year.
"Maintaining a tight monetary policy stance and active fiscal and other methods are necessary to bring down inflation rates," the panel said.
Federal bond yields inched up one basis point after the report as it undermined expectations the government would trim retail fuel prices to match a fall in global crude prices.
Analysts said the report supported the widely held view that India's scorching pace of growth would cool, but said inflation could be lower than the panel's fiscal year-end estimate.
"The downward revision in the panel's GDP growth outlook to 7.7 percent in FY09 is in line with our view that growth will moderate this year," said Sonal Varma, economist at Lehman Brothers in Mumbai.
"However, we expect the slowdown to spread from industrial to the services sector and therefore have a lower GDP forecast of 7.3 percent."
Inflation and deficit risks
The report said India had been slow to raise the retail price of petroleum products in the face of surging crude rates and there remained a "large backlog" of adjustment still to be made.
The Reserve Bank of India (RBI) has raised its benchmark lending rate INREPOECI by 50 basis points to 9.0 percent, its highest in seven years and the third increase in two months.
It also increased the proportion of funds banks must keep on deposit to 9.0 percent INCRRECI to tighten liquidity.
The panel said fiscal deficit targets for 2008/09 would be exceeded, while revenue deficits would persist. It added that serious fiscal risks were arising from growing off-budget liabilities estimated at 5 percent of GDP.
Hefty fuel subsidies, loan waivers for millions of poor farmers and proposed salary increases for government employees are constraining the country's finances.
"Despite appreciable fiscal consolidation, large and growing off-budget liabilities are however a matter of concern. With these included, the fiscal situation no longer looks stable and sustainable," the panel said.
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