At 3%, FDI inflows clocked slowest growth rate of last five years in FY18

At 3%, FDI inflows clocked slowest growth rate of last five years in FY18

According to experts, it is critical to revive domestic investments

Foreign direct investment (FDI) in India seems to be petering out with the inflows growth rate recording a five-year low of 3 per cent at Dollar 44.85 billion in 2017-18.

According to the latest data of the Department of Industrial Policy and Promotion (DIPP), FDI in 2017-18 grew by only 3 per cent to Dollar44.85 billion.Foreign inflows in the country grew by 8.67 per cent in 2016-17, 29 per cent in 2015-16, 27 per cent in 2014-15, and 8 per cent in 2013-14.However, FDI inflows recorded a negative growth of 38 per cent in 2012-13.

According to experts, it is critical to revive domestic investments and further ease of doing business in the country to attract foreign investors.

Depositories share companies' information with exchanges on FDI limits

Anil Talreja, Partner, Deloitte India, said the low growth of FDI in the consumer and retail sectors can be mainly attributed to uncertainty and complexity of the FDI policy."While the government has taken substantial efforts in relaxing the regulations as well as removing ambiguities, global consumer and retail companies are still hesitant to take decisions to invest in India," he said.

Govt's move to push FDI via stock exchanges fails to yield results

India has done considerably well in terms of moving up the ranking in terms of ease of doing business, however, it needs to reach a level that creates enthusiasm for the overseas investors, Talreja added.Biswajit Dhar, professor at Jawaharlal Nehru University, said, "The status of economy reflects the magnitude of the FDI in a country. In the past couple of years, we have seen decline in domestic investment rate and now, FDI is following that suit."He said that the government needs to take steps for reviving the domestic investment to attract foreign investors.An UNCTAD report, too, has recently stated that the foreign direct investment in India decreased to Dollar 40 billion in 2017 from Dollar 44 billion in 2016 financial year.

Govt counters UN report on fall in FDI, claims it rose to Dollar 61.96 bn in FY18However, outflows from India, the main source of the FDI in South Asia, more than doubled to Dollar 11 billion, the report stated.UNCTAD Secretary-General Mukhisa Kituyi has said, "Downward pressure on the FDI and slowdown in global value chains are a major concern for policy makers worldwide, and especially in developing countries".

The main sectors that received maximum foreign inflows in the last fiscal include services (Dollar 6.7 billion), computer software and hardware (Dollar 6.15 billion), telecommunications (Dollar 6.21 billion), trading (Dollar 4.34 billion), construction (Dollar 2.73 billion) automobile (USD 2 billion) and power ($1.62 billion).

Mauritius has emerged as the largest source of FDI in India with Dollar 15.94 billion in 2017-18 followed by Singapore (Dollar 12.18 billion), Netherlands (Dollar 2.8 billion), the US (Dollar 2.1 billion) and Japan (Dollar 1.61 billion).Further, the data showed that the FDI equity inflow of Dollar 44.8 billion in 2017-18 is the highest ever for any financial year.

FDI is important as India would require huge investments in the coming years to overhaul its infrastructure sector to boost growth. Decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee.

The Business Standard, New Delhi, 02nd July 2018

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said. Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm

Credit card spending growth declines on RBI gaze, stress build-up

Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem. “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and

CA Online

Search This Blog