Washington: The World Bank visualises a slowdown in India's high-technology services exports in the wake of a global downturn in Information Technology (IT), including the software industry.

In India, the slowdown is imminent, says a new World Bank report. "However, the country's foreign exchange reserves stand at comfortable levels, equivalent to six months of import coverage."

It draws attention to recent statistics that show continued growth in manufacturing, services, construction and finance, insurance and real estate at rates of more than six per cent through 2000.

Among the positive factors, the World Bank lists the government of India's announced aim to liberalise the country's trade regime and to reduce other barriers in its export-import policies.

However, a factor restraining more robust growth in India is the persistence of large budget deficits, which currently stand at some 10 per cent of Gross Domestic Product (GDP) when capital expenditures are included, the report says.

Dealing with the economic situation in South Asia as a whole, the report says, the slowdown in industrial countries and continued softening of commodity prices will adversely affect the region, with stronger impacts on the smaller, more open economies of Bangladesh, Nepal and Sri Lanka.

It says that the GDP advanced by 5.8 per cent in South Asia during 2000, up marginally from 5.7 per cent in 1999.

It, however, notes that South Asia remains the most energy-intensive of developing regions and has been hit hard by the escalation of world oil prices. This increase, coupled with deterioration in key regional commodity prices, has placed heavy pressure on the region's current account deficit, which reach $ 14 billion, or 2.2 per cent of GDP in 2000, the worst performance since 1989.

The current account imbalance is expected to rise toward 2.4 per cent over the next two years, it says.

The report also notes that privatisation picked up in India following the election of a new government, with sales in the banking, oil and gas, telecommunication and power sectors. Key sales include the public offers of ICICI, Gas Authority of India Ltd. and Videsh Sanchar Nigam Limited (VSNL), which raised $ 1.5 billion, $ 218 million and $ 104 million respectively.

India Abroad News Service

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