Egypt crisisA prolonged political turmoil in Middle Eastern countries, led by Egypt, may further deteriorate India's current

account deficit and dent investment flows to emerging markets, Citi said in a research note on Monday. The crisis in Egypt could result in oil prices trending higher, which will impact India's already deteriorating current account deficit, leading to higher subsidies and inflation, analysts Rohini Malkani and Anushka Shah wrote. India's current account deficit in the September quarter widened to a record high of $15.8 billion as booming domestic consumer demand sucked in imports and service sector exports suffered from weak global demand. Events in Egypt will have an impact on Indian monetary policy, the country's central bank deputy governor said on Sunday, underscoring the worries about headline inflation above 8.4 per cent. India's economy, Asia's third-largest and a driver of the world recovery, is expected to grow 8.6 per cent in the year ending in March, but at the risk of high commodity prices widening the trade gap and exacerbating inflation. The Reserve Bank of India (RBI) has increased its end March inflation forecast to 7 per cent from the earlier 5.5 per cent. The central bank has raised rates seven times since March, although monetary policy is expected to have only a limited impact on reining in supply-side driven food inflation. The turmoil in Egypt has raised concerns of a disruption to supply of Middle East oil shipped through Egypt, and of unrest spreading across the Middle East and North Africa, which combined produce more than a third of the world's oil. North Sea Brent crude oil futures jumped back above $100 on Monday. The Middle East accounts for more than half of India's remittances of $52 billion and is also India's largest export market, the Citi report said.

Open up economyUS Commerce Secretary Gary Locke on Monday said India needed to open up its economy by reducing trade barriers and tariffs to encourage direct international investment and fight poverty. Locke, who is in India on a mission to encourage India-US business links to grow in line with warming political ties, said he was in talks with officials on areas of contention such as market access. India has undergone dramatic economic liberalisation over the last 20 years, but international companies are still banned from many potentially lucrative sectors, such as supermarkets for the country's booming consumer classes. "Even though India has made tremendous strides to open up its economy, there are still too many tariffs and too many barriers to foreign participation in the Indian economy," Locke said at a conference in New Delhi "US businesses can help India achieve its goal of providing a better standard of living... but market barriers are restricting them." Locke, who is accompanied by leaders of 24 companies including major players in defence and nuclear power, said "India's market barriers may seem to protect some domestic industries in the short term. But over time, these barriers will limit foreign direct investment."