iStockRelated
Mumbai: Even as the economy slowed down following COVID-19 induced nation-wide lockdown, foreign investors took back home 30 per cent higher returns from their investments in India in Q3'2021.
Foreign investors took back home $15.07 billion as investment income during October-December'20 compared to $12.2 billion in the same period a year ago, according to the latest balance of payments data released by the Reserve Bank of India on Wednesday.
An analysis of the newer format of balance of payments data show that it is not returns on record portfolio flows during the quarter, but returns on FDI investments and servicing of bonds and NRI deposits that caused the surge in investment income outflows.
Of the $15.07 billion repatriated by foreign investors during the quarter only $1.9 billion is on account of profits out of portfolio investments, $3 billion was income from FDI investment, servicing of overseas bonds and NRI deposits during the quarter. " Corporate have managed to earn higher profits in the quarter through cost cutting and various measures" said Madan Sabnavis, chief economist at ." The same is true for MNCs who have likely to have repatriated these profits"
India has been witnessing strong foreign investment flows both through the FDI route as well as portfolio routes even during the pandemic. In Q3'2021 itself foreign investments amounted $38 billio- both FDI and portfolio flows included. This has also led to the Reserve Bank piling up record foreign exchange reserves, which are at around $582 billion as of March19'20. Going ahead, once could see more such outflows of profits from India. "Investments in India are increasing. As a result, primary income and dividend arising out of such income is also increasing" said Rahul Bajoria, chief India economist at Barclays Capital. "It is a side effect of such large outflows".
The Reserve Bank has attributed the rise in current account deficit also to the surge in outflow of investment income. "Underlying the current account deficit in Q3:2020-21 was a rise in the merchandise trade deficit to $ 34.5 billion from $ 14.8 billion in the preceding quarter, and an increase in net investment income payments" RBI said in a release on Wednesday.
Foreign investors took back home $15.07 billion as investment income during October-December'20 compared to $12.2 billion in the same period a year ago, according to the latest balance of payments data released by the Reserve Bank of India on Wednesday.
An analysis of the newer format of balance of payments data show that it is not returns on record portfolio flows during the quarter, but returns on FDI investments and servicing of bonds and NRI deposits that caused the surge in investment income outflows.
Of the $15.07 billion repatriated by foreign investors during the quarter only $1.9 billion is on account of profits out of portfolio investments, $3 billion was income from FDI investment, servicing of overseas bonds and NRI deposits during the quarter. " Corporate have managed to earn higher profits in the quarter through cost cutting and various measures" said Madan Sabnavis, chief economist at ." The same is true for MNCs who have likely to have repatriated these profits"
India has been witnessing strong foreign investment flows both through the FDI route as well as portfolio routes even during the pandemic. In Q3'2021 itself foreign investments amounted $38 billio- both FDI and portfolio flows included. This has also led to the Reserve Bank piling up record foreign exchange reserves, which are at around $582 billion as of March19'20. Going ahead, once could see more such outflows of profits from India. "Investments in India are increasing. As a result, primary income and dividend arising out of such income is also increasing" said Rahul Bajoria, chief India economist at Barclays Capital. "It is a side effect of such large outflows".
The Reserve Bank has attributed the rise in current account deficit also to the surge in outflow of investment income. "Underlying the current account deficit in Q3:2020-21 was a rise in the merchandise trade deficit to $ 34.5 billion from $ 14.8 billion in the preceding quarter, and an increase in net investment income payments" RBI said in a release on Wednesday.
Read More News on
Download The Economic Times News App to get Daily Market Updates & Live Business News.
3 Comments on this Story
 | To kut S D h10 hours ago I want to kill the writer of this article |
| Prakash Ramiah13 hours ago We badly need one acre one cr 5 percent 5 years tax free,cap gains free,gst free assignment rights bonds.this is non inflationary and we need no fii,fdi,four and our liabilities are localised and assets are localised.efficiency of capital increases.only royalties,technical know how needs to be paid from current account. Value at risk from 8inflow to outflows is not static but dynamic in nature. Local sovereign bonds needs to be in the portfolio of of others and not vice versa. Every currency requires constant monitoring for asset,tax,dividends and currency loss.exposure of fii in govt treasuries,dated securities and exposures in fsi,stock market is like a rain cloud. Recently a fii did a 5 year switch of a defunct corporate bond for a 16 percent yeild with five percent meaning a whopping 21 percent returns. Had there been a land comp bonds our boys would have closed at 12 percent. I wish better sense prevails in f ex money flows. |
 | Hemant Pisat15 hours ago That's really a kill, money begets money. Indian retail investors left licking their own wounds. |
