Delhi: Deloitte India today released the Deloitte Global Economic Outlook: 4th Quarter 2008, published by five Deloitte economists which discusses the historical precedent of financial crisis while predicting the future beyond the current economic predicaments for India.

The report clearly highlights that currently India will face slower growth prospects with analysts predicting a fall of as much as 2 percentage points over the next couple of years.

However in the longer term, the outlook will depend on the government's ability to invest in infrastructure and the fundamentals of the Indian economy remain strong and a bounce-back, once set in motion, will be faster than other economies in Europe, North America and Japan.

Commenting on the report Dr Kalish, Director of global economics, Deloitte Research, said ''This report is meant to provide a strategic perspective about the economy for the business community. In the current environment, it is important for companies in both developed and emerging countries to understand the risks they face and the potential impact on their business strategies.''

Currently the global economy remains at substantial risk, but the speed and size of the various governmental rescue efforts bode well for a recovery in the not-too-distant future. However, more than half of India's services and merchandise exports go to the US and the ongoing slowdown in the US economy will likely affect the future growth in India's exports. Experts predict that US businesses would likely either reduce outsourcing or withhold expansion plans.

Consequently, BPOs, financial services and other software exports contributing to about 2 per cent of India's GDP are likely to be affected. Industry association National Association of Software and Service Companies (NASSCOM) has predicted that there is likely to be a significant impact of the global crisis on the Indian BPO sector. Despite significant Asian growth and India's strategy to focus on non-US markets for exports, a slowdown in the US is expected to influence almost all economies worldwide which will have an eventual cascading impact on the Indian economy.

Elaborating further Shanto Ghosh, principal economist, Deloitte India, said, ''Unlike some past financial crises, this one resulted in a rapid and massive governmental response on both sides of the Atlantic. Thus, there are reasons we can be cautiously optimistic about the medium-term outlook for the global economy. In India too policy response has been quick and continuous.

The RBI, in an attempt to ease the liquidity constraints in the economy, reduced the CRR rate several times in September and October, reduced the Statutory Liquidity Ratio and introduced other changes in the quantum of External Commercial Borrowings and foreign institutional investments into the capital markets through participatory notes.''

As rightly stated in the report The Reserve Bank of India, has cut the repo rate by 50 basis points to 7.5 per cent with effect 3 November. It has also cut CRR, or cash reserve ratio, by 100 bps in two stages to 5.5 per cent. The first stage of CRR cut is with effect from 25 October and the second stage would come into effect 8 November. The 100-bps CRR cut will infuse Rs40,000 crores into the system, the RBI said. The central bank is also expected to cut SLR to 24 pe cent by 100 bps from 8 November.

The report offers a long-term view, suggesting impacts in multiple business sectors thus concluding - In the United States, recapitalization of banks will help to revive credit market activity, Eurozone banking consolidation will have a positive long-term impact on European capital market efficiency and finally the emerging economies of Russia, India, and China, while slowing, will remain important drivers of global growth.