Total foreign investment rose 80% from $44 billion to $80 billion, according to latest Reserve Bank data. The rise is almost entirely due to foreign portfolio inflows which rose more than 20 times from $1.4 billion in FY20 to $36.8 billion in FY21.
Synopsis
The combined flow through FPI and FDI rose 80% last fiscal taking India’s forex reserves to a new high. RBI data show almost the entire surge in inflows was due to portfolio flows with durable FDI flows remaining flat.
Mumbai: Hot money dominated the flow of overseas funds to India last fiscal raising the risk of heightened volatility in financial markets whenever the ‘sudden stop’ comes with the Federal Reserve hints of tapering its bond purchases.
The combined flow through FPI and FDI rose 80% last fiscal taking India’s forex reserves to a new high. RBI data show almost the entire surge in inflows was due to portfolio flows with durable FDI flows remaining
