The much-talked about recessionary pressures have not deterred ambitious Private Equity (PE) firms that raised $400 bn globally. An assessment of the investment climate in the backdrop of unfavorable economic trends indicates that a majority (63%) of the investors continue to pursue their search for profitable investment avenues this year, according to estimates.

Among these active investors, 71% confirm their continued interest in the emerging markets like India, where the economy is relatively on a firm footing, as the favorite investment destinations. The reason—India is predicted to register a GDP growth of more than 7% this financial year, a drop from 9% that the country achieved last year. In contrast, however, global economic growth is projected to have shrunk to 3.7% in 2008 from about 5% the previous year, according to the estimates of the International Monetary Fund. An earlier study by the Economic Intelligence Unit suggested India will contribute more than 12% toward global economic growth by 2020, from approximately 5% in 2006. This is also a reflection of the `Decoupling Theory' for the emerging markets, particularly in Asia, which are less dependent on developed markets. Growth deceleration was much less marked in the emerging markets in the first half of 2008 than in developed markets. The prevailing trends indicate that developed markets' growth will slow to 1% in 2009 from 2.5% in 2007 while emerging markets would still maintain a healthy pace of 6.6%.

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