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Oil price hike, political uncertainty will undermine Indian economy, says HSBC

Compared to other Asian countries, the Indian economy is likely to fare poorly with the prevailing political uncertainty dampening growth prospects in fiscal 1999-2000 (April-March), said HSBC Securities in its outlook report for May released on May 14.

In relative terms, India should underperform the rest of Asia, said HSBC. It said that the sudden change in political situation could have a negative impact on the economy.

Had it not been for the political imbroglio, we would have witnessed a rare bull run in the economy, HSBC said. This would have been fuelled by an improving economy, increased liquidity and a market-friendly Budget, it said.

Continuing political uncertainty can mess up the Budget deficit numbers -- pointing to rupee depreciation by more than conservative estimates, it said.

The firm did not detail those estimates.

According to the report, another drag on the economy would be the rise in crude oil prices. The rise in crude prices (brent crude is expected to stabilise at $ 16 per barrel) may mean bad news for the economy, it warned.

UNI

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