FDI INFLOWS DIP TO $1.5 B IN SEPTEMBER, LOWEST SINCE DECEMBER

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FOREIGN direct investment (FDI) inflows slowed to $1.5 billion in September this year, the lowest since December 2008. Last year, the same month witnessed inflows of $2.5 billion, while the preceding two months clocked FDI of $3 billion each, the latest data from Reserve Bank of India (RBI) show.

However, economists have termed the lower inflow during September a mere ‘blip’. "Once money is committed, inflows tend to bulge and slow down in certain months," said an economist with an investment bank.

Also, a look at total FDI inflows, including reinvested earnings and other capital, in the first-half of the current fiscal at $17.7 billion depicts marginallybetter performance compared with those in the corresponding period of the previous fiscal ($17.2 billion). However, equity inflows during April- September this fiscal work out to $15.65 billion compared with last year’s $17.2 billion, the balance being from reinvested earnings and other capital.

   If one compares FDI inflows sequentially through last three half-yearly periods, covering the period prior to and after the Lehman collapse, FDI inflows have been fairly stable, compared with portfolio flows through foreign institutional investments, American Depository Receipts (ADRs) and Global Depository Receipts (GDR) routes. Total FDI inflows in the last three half-year or six-month periods were stable at around $ 17 billion in the six-month period each. Pure FII inflows in the first half of the current fiscal amounted to $15 billion compared to net outflows in the same period a year ago. Even factoring in strong revival of capital flows through this route, FDI inflows so far this year are higher than FII inflows.

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