Bank of baroda

A slowdown in economic growth in India could cause our business to suffer.
The Indian economy has shown sustained growth over the last few years with GDP growing at 6.9% in fiscal 2005,
8.5% in fiscal 2004 and 4.0% in fiscal 2003. RBI in its Mid-term Review of its Annual Policy 2005-2006, stated that it
expects GDP growth to be 7.5% in fiscal 2006. However, growth in industrial and agricultural production in India has
been variable. Industrial growth was 8.3% for fiscal 2005, 6.5% in fiscal 2004 and 6.2% in fiscal 2003. Agricultural
production grew by 1.1% in fiscal 2005 compared with 9.6% in fiscal 2004 and a 5.2% decline in fiscal 2003. Industrial
production increased by 9.6% during April-May 2005. (Source: RBI First Quarter Review, 2005-2006.) Any slowdown in
the Indian economy or volatility in global commodity prices, in particular oil and steel prices, could adversely affect our
borrowers and contractual counterparties. With the importance of retail loans to our business, any slowdown in the
growth of sectors like housing and automobiles could adversely impact our financial performance. Further, given the
importance of the agricultural sector to our business, any slowdown in the growth of the agricultural sector could also
adversely impact our performance.
A significant change in the Government of India’s economic liberalization and deregulation policies could
disrupt our business and cause the price of our Equity Shares to decline.
Our assets and customers are predominantly located in India. The Government of India has traditionally exercised and
continues to exercise a dominant influence over many aspects of the economy. Its economic policies have had and
could continue to have a significant effect on private sector entities, public sector entities including us, and on market

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conditions and prices of Indian securities, including our Equity Shares. The present Government, which was formed
after the Indian parliamentary elections in April-May 2004, is headed by the Indian National Congress and is a coalition
of several political parties. Any significant change in the Government’s policies or any political instability in India could
adversely affect business and economic conditions in India and could also adversely affect our business, our future
financial performance and the price of our Equity Shares.