Unprecedented short-term foreign portfolio investments are entirely responsible for the surge
Total foreign direct investment (FDI) inflow in 2020-21 is $81.7 billion, up 10% over the previous year, reported a recent Ministry of Commerce and Industry press release. It further added, “Measures taken by the Government on the fronts of Foreign Direct Investment (FDI) policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country.” The short press release highlighted industry and State-specific foreign investment figures without detailed statistical information.
The Reserve Bank of India (RBI) bulletin, which was released a week earlier, has the details. They are conceptually more transparent and consistent. The table below summarises the main headings for 2019-20 and 2020-21 and the percentage growth rate.
What accounts for gross inflow?
“Gross inflows/gross investment” in the RBI report is the same as “total FDI…