Widening Gap Between FDI

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Widening gap between FDI, FII inflows causing concern PTI, Mar 21, 2011, 04.15pm IST Tags: gdp| FII  NEW DELHI: With slowdown in FDI by 25 per c ent, India's dependence on FII inflows, considered as hot money for maintaining its current accoun t, has increased this fiscal. Moreover, the gap between the foreign direct investment (FDI) and the inflows from foreign institutional investors (FIIs) mainly in the stock market, has grown to USD 14 billion in 2010-11, according to the latest official data. While, FIIs invested USD 31.03 billion during April- January 2010-11, India received FDI of USD 17.08 billion during the same period, showing a gap of about 45 per cent between the two. Ads by Google 15 Reasons To Buy Gold Here's why we think gold should be on every investor's mind. Wealthdaily.com/Gold_Report In 2009-10, the difference between FII and FDI was only USD 1.9 billion. However, in the previous years of 2007-08 and 2008-09, FDI inflows were way ahead of the money coming through the share market. Although the country's current account deficit (CAD) has been kept under check due to large capital flows coming through the FII route, b ut the quality of the inflow remains an issue. In its mid-quarterly policy review, the RBI had estimated the CAD for 2010-11 at around 2.5 per cent of the country's Gross Domestic Product ( GDP). "...it is necessary to focus on the quality of capital inflows with greater emphasis on attracting long-term components, including FDI, so as to enhance the sustainability of the balance of  payments (BoP) over the medium-term," RBI had said wh ile expressing concerns on the decline in FDI. The drop in FDI inflows to USD 17.08 billion during the ten months of the current fiscal from USD 22.96 in the corresponding period (April-January) of the previous financial year is attributed to the financial troubles in several European economies. Germany, France, the Netherlands and UK are the main investors in India. Widening gap between FDI, FII inflows causing concern PTI, Mar 21, 2011, 04.15pm IST Tags: gdp|

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