Private equity funds seem more excited with the outlook for the growth of Indian companies than of companies in China. This was shown in a survey conducted by the Emerging Markets Private Equity Association, released in September.

The study pointed out that in 2007, private equity funds allocated about US$ 14 billion in investments to India, versus US$ 12.8 billion to China. The study shows that the scenario for Indian preponderance has been repeating itself in the past 18 months. Up until June of this year, resource intakes in India and China were US$ 6.3 billion and US$ 5.2 billion, respectively.

The Indian economy has been showing buoyancy, even with the storm beating down on the global financial market. The International Monetary Fund (IMF) lowered the expected GDP growth for India by only half a percentage point – from 8.4% to 7.9%.

But it’s not all rosy. In September, annual inflation reached 12.3% - the highest in 13 years. The rupee’s oscillation in relation to the dollar has also been increasing the foreign exchange risk. In 2007, the Indian currency appreciated by 12% relative to the dollar, but this year the tables have turned, with the rupee depreciating by 12.2%.