Worrying global trends may affect India capital flows: ICICI

The capital flows to India might be impacted by the "worrying" trends in the global economic scenario, the country's largest private sector bank ICICI Bank's CEO Chanda Kochhar warned today.

Noting that the investors across the world were getting into a risk-aversion mode, she said that the global economic scenario has become "quite worrying".

"As of now since people are getting into risk aversion and de-leveraging mode the world over, I think it will impact capital flows in India," Kochhar told reporters here on the sidelines of a World Economic Forum summit here.

The global situation is quite challenging, quite worrying, she added.

Debt-laden European countries, particularly Greece and now Italy, are under intense global pressure to move swiftly to stave off bankruptcy risks, amid fears that the crisis could destabilise the entire Eurozone region.

International Monetary Fund (IMF) chief Christine Lagarde recently warned that the world risked plunging into a "downward spiral" of financial instability and urged Asian economies to be on their guard.

Lagarde had said Asia was not immune to problems currently sweeping the eurozone.

Asked whether removal of oil subsidies was the right way of tackling the current high-price situation, Kochhar said: "I think, as far as inflation is concerned, it is my belief that in the long term, as a country, we have to focus on creating more supply."

State-owned oil firms, recently hiked the petrol price by Rs 1.80 per litre, the fourth increase this year, as the rupee fell from 46.29 a dollar to Rs 49.40 a dollar.

The headline inflation remained close to the double-digit mark at 9.72% in September as all items, including food products, fuel and manufactured goods, grew costlier, a development that might prompt the Reserve Bank to continue with its monetary tightening policy by raising interest rates.

The apex bank has already hiked key policy rates 13 times since March 2010 to tame inflation. The bank's next policy review is slated for December 16.

Continuing its dismal performance, industrial growth also fell further to 1.9% in September, mainly due to poor output from the manufacturing sector.

Growth in factory output, as measured in terms of the Index of Industrial Production (IIP), stood at 6.1% in September last year.