How will China stimulus impact India

CHINA'S effort to revive its economy via a financial and monetary stimulus package is perceived to have a strong impact on India - positive as well as negative.

- ARSHAD KHAN

• Reduction in uncertainties in China will attract higher capital allocation to emerging mkts

While the initial impact is being felt on Dalal Street as the foreign institutional investors (FIIs) are seen "selling India and buying China", the success of the package might prove to be beneficial for India. Experts feel it may result in flight of higher foreign funds to India via emerging market route, negligible impact on "China 1" and control of excessive dumping of finished Chinese products.

"The package is a bold set of interventions by the government. It will allay fears among foreign investors who were becoming sceptical about the Chinese government's ability to make big-bang reforms. Last time they conducted major reforms was in 2008, which ushered China into to a new league of development backed by large foreign investor participation.

I expect the Chinese investment instruments will gradually start to gain some of their lost sheen, starting with its equities followed by real estate," said Debopam Chaudhuri, chief economist of Piramal Group As per him, this is piece of good news for India as well.

"China serves as a lighthouse to foreign investors searching for emerging market (EM) opportunities. Reduction in uncertainties within China will attract higher capital allocation to EMs, and India with its growth potential can attract a large share of that pie.