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World Bank Report: India's growth prospects may suffer

By Our Special Correspondent

NEW DELHI APRIL 2. The World Bank today endorsed the economists' viewpoint that a prolonged war in Iraq could adversely affect India's growth prospects in the new fiscal year.

The World Bank's analysis is based on the fact that India is a net importer of oil and if the war continues for long, the volatility in the international oil prices could impair India's growth prospects.

Giving out the bank's viewpoint while releasing the Global Development Finance report, the bank's economist, William Shaw, said the war had added more bumps to an uneven global expansion.

This was mainly because of higher oil prices, falling consumer and business confidence, increased volatility in financial markets and higher fiscal deficits. Moreover, he said war might have an impact on remittances flow as well.

Otherwise, the World Bank projected an average 5.3 per cent economic growth for India and other South Asian nations during 2003, which was marginally lower than 5.4 per cent projected in December 2002.

Turning to the report, Mr. Shaw pointed out that India topped the World Bank's list of workers' remittances at $10 billion, which worked out to over 13 per cent of the total $72.3 billion flowing to all developing countries during 2001.

India was closely followed by Mexico with $9 billion inflow while the Philippines received $6.4 billion, Morocco $3.3 billion, Egypt $2.9 billion and Turkey $2.8 billion.

Of the neighbouring countries, Bangladesh received $2.1 billion while Pakistan got $1.5 billion and Sri Lanka $1.1 billion. The bank report also said foreign direct investments and remittances outpaced debt as a source of financing the developing nations.

Considering the aggregate inflow into India, Bangladesh, Pakistan and Sri Lanka, the report said South Asia was the largest recipient, with remittances of nearly 2.5 per cent of gross domestic product in 2001.

According to the report, the net fiscal loss associated with Indian emigration to the U.S. was estimated at 0.24-0.58 per cent of India's GDP in 2001 but remittances amounted to at least 2.1 per cent of GDP in the same year.

The U. S. and Saudi Arabia were the largest sources of workers' remittances to developing nations followed by Germany, Belgium and Switzerland.

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