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This report has been prepared by the World Economic Forum’ Global Risk Network and the Confederation of Indian IndustryCII) for the India Economic Summit in New Delhi on 16-18 November 2008. For the past two years, the India@Risk report discussed the latest insights into trends, potential consequences and mitigation relevant to key risks facing India.This year, in consultation with CII, the Global Risk Network
decided to consider these risks and others in four areas:
Economic Security, Energy Security, Agriculture and Food
Security and National Security.
Economic Security
• How is the global financial crisis going to affect India?
• How can India manage the current financial turmoil?
• What are India’s strengths?
Energy Security
• How can India improve the energy supply network?
• How can India become a low carbon economy?
Agriculture and Food Security
• How can agricultural productivity be improved?
• What can be done to address the problem of malnutrition?
• How can India manage its water resources to avoid
problems of availability and quality becoming acute?
National Security
• How can India establish itself as a force for stability in the
region?
• How can India manage to contain and address internal
sources of instability?
In preparing this report, experts and policy-makers from
business, academia and non-governmental organizations
were interviewed about what they consider to be the key to
India’s future growth, which risks might pose threats to
progress, and how those risks might be mitigated. At the time
the interviews were conducted, the global economy was
experiencing events on a scale that some say has not been
seen since the Great Depression of the 1930s. Following the
collapse and, in some cases, subsequent bail-out of several
major financial institutions in both the US and Europe, the
world’s financial markets suffered huge losses, dropping to
levels below those of 2003 or 2001. Volatility hit record levels
and key indicators of confidence in the banking system
showed the depth of the crisis. The ensuing negative news
about the outlook for growth, the likelihood of a recession in
several key economies, rising uneployment and declining
orders only compounded the situation as credit markets froze
and concerns about liquidity and further write-downs
mounted.
India’s own markets and growth outlook have not escaped;
the latest IMF forecast for GDP growth in 2009 is now 6.9%.
Clearly, the global economic picture will be harsher next year
and there will be greater pressures on the Indian economy.
Should this global downturn trigger a rise in protectionism and
retrenchment from globalization, there is little doubt that highgrowth
economies will also be affected through downturns in
trade. However, a greater risk could come from a deeper
retrenchment from globalization, which could manifest itself
not only through decreased trade but also through countries
taking tougher stances on global issues such as climate
change, resource management, and the role and reform of
international organizations.
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Many of the issues discussed in this report will require considerable investment on the part of India’s public and private sectors over the long term. Decision-makers in government and business will be forced to make trade-offs as to where spending and investment are allocated. However, a tighter environment may also help speed reforms and
encourage greater efficiency. A great deal of political will and dialogue with different stakeholders will be required, but India’s growth is still strong relative to other economies and its growth story will continue to be one that will unfold over decades rather than years.
About the Global Risk Network
This report builds on the existing work of the Global Risk
Network of the World Economic Forum, primarily the annual
Global Risks report produced in collaboration with Citi, Marsh
& McLennan Companies (MMC), Swiss Re and the Wharton School Risk Center.
The Global Risk Network is composed of an unparalleled
network of industry, risk and country experts who work with business leaders and policy-makers to:
• Create a framework for assessing and prioritizing existing
and emerging risks to global business over the short and
long term
• Alert key decision-makers to the impact these risks might
have on their environments
• Assist leaders in their reflection on how risks may be
mitigated at the global, regional, industry and company
levels.
• Transform these global risks into business opportunities.
To generate a global risk, an issue must have global scope and cross-industry impact, and there must be uncertainty as to how the risk will manifest itself (in regard tothe likelihood of occurrence and severity of impact).
Over the last three years, the Global Risk Network has
engaged a wide range of experts in the economic,
geopolitical, environmental and societal fields to explore the
nature of the risk landscape facing governments, societies
and businesses. In conjunction with its partners, the Global
Risk Network has identified 23 core global risks to the
international community over the next 10 years. These core
global risks have been assessed in terms of likelihood and
severity (see Figure Global Risk Landscape). In addressing
likelihood, actuarial principles were applied in the few cases
where sufficient data existed; in most cases, only qualitative
assessments, based on expert opinion, were possible.Although some risks are inherently long term (such as climate
change) and others (such as further oil price shocks) could
occur in the near term, all risks were evaluated within a 10-
year time frame.
A more detaildescription of the core global risks can be
found in the Global Risks 2008 report, published for the World
Economic Forum Annual Meeting 2008 in Davos. |
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