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Can China slowdown be a burden for India?
Thu, 8 Oct Pre-Open

A lot of noise was being made around China's pain being India's gain. But it's all a different story right now. The downturn in China can turn out to be worrisome for domestic markets. And the RBI governor Raghuram Rajan also shares this view. According to him the adverse environment in China can lead to global demand being squeezed further.

Investments have not shown any major signs of recovery.  The global environment has prevented companies from taking any further risks. Some of the well performing economies have been pushed in to slumber. This has not only affected the overall demand but has also raised the level of uncertainty. And India with a vibrant export trade is no exception to this. On a positive note, the slowdown in China can result in India attracting more foreign investments. But the key lies in providing a sustainable business atmosphere in the country.

Measures have been taken by the government and the RBI to improve the business environment in the country. Recently RBI cut repo rates by 50 basis points. The main encouragement behind this was to boost consumption and economic activity. Along with that, efforts are being made to mitigate the effects of poor monsoon and keep food prices remain at reasonable levels. RBI has estimated inflation to fall below 6% by January 2016.

With government providing an enabling environment, it's time for companies to move on to the next level. On the back of cut in interest rates, companies can access cheaper debt for growth and expansion. Regardless of global uncertainty, companies with strong fundamentals will obviously be in a better position to grow. It remains to be seen whether the country will be able to utilize this opportunity to boost economic growth.

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