High commodity prices, its inflation potential worrisome: Essar

Leading oil firm Essar today said that rising price of commodities, particularly oil and gas, due to globalization, will lead to inflationary pressures.

"...When it comes to the way the global economy will evolve, one worry is the future commodity prices and its inflation potential," Essar Group Chairman Shashi Ruia said addressing HT Leadership Summit here.

"There would be huge pressure on the prices of resources like oil and gas, to feed the hunger of China and India's growth. This will cause hardships for industry while also adding to the overall inflationary environment," Ruia said.

Ruia also brought attention towards rising demand of human resources due to more industrialisation and freeing trade across the international borders.

Going global according to him is Indian companies buying assets abroad and running them successfully, but domestic firms are not exactly flush with funds like Chinese.

He said, "Global India will truly 'Go Global' when it is able to market and sell its own goods and its own services in the global market place on a much larger scale."

Ruia also stressed on the need for creating sovereign wealth funds by Indian government as functional across the World, to lend money to companies to go global.

Expressing concern over low Greenfield investments by Indian companies globally, Ruia said, ".. The total value of Indian acquisitions abroad is not more than $45 billion and 3-4 transactions account for large chunk of this."

"There have not been significant Greenfield investments by Indian companies globally. The value of global acquisitions has declined from a level of $1.22 trillion in 2007 to $250 billion in 2009. This decline reflects the global sentiments," he added