A drop in commodity prices may help lower borrowing costs in India, and increasing competitiveness of the country’s exports against China will quicken economic growth, the nation’s second-biggest money manager said. “Lower prices of oil in particular and other commodities in general could trigger a reversal in the trend of rising interest rates,” Prashant Jain, chief investment officer at HDFC Asset Management Co., which manages $20 billion in assets, said in a note to investors. The S&P GSCI Spot Index of 24 materials yesterday slid to the lowest level since Dec. 2, and oil touched a 10-month low, amid the financial turmoil triggered by the Standard & Poor’s cutting U.S.’s AAA rating. India’s central bank has persisted with the most aggressive monetary tightening among major Asian economies to tackle inflation, contributing to the 16 percent decline in the benchmark stock index this year. “India is one of the few emerging economies that is a net importer of commodities, oil being the largest,” Jain said in the note titled ‘It is always darkest before dawn’. “Every $20 fall saves the country $18 billion per annum, equivalent of 1.1 percent of gross domestic product. Lower oil means lower fiscal deficit, lower inflation, lower interest rates over time.” Shipments from India are “gaining in competitiveness” against China because of the depreciation of the rupee versus the yuan and the higher wage inflation in China, Jain said. To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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