Riding on the back of Achche Din (feel good) wave even before NDA Government was sworn in, global investors have been betting on Prime Minister Narendra Modi as indicated by a whopping over 500 percent growth in the inflows from abroad which are likely to go well beyond USD 85 billion in the current fiscal, according to an ASSOCHAM study. Going forward, the foreign investment will reach the all-important USD 100 billion mark in FY, 2016, the study projected.
The foreign investment comprising both foreign institutional investors (FIIs) and foreign direct investment (FDI) went up to USD 39.90 billion in April-September, 2014 from USD 7.76 billion in the first half of the previous fiscal.
The major turnaround has come about in the FIIs inflows which entered into a great positive territory rising up to USD 22.33 billion from a minus USD 7.04 billion. There was an upward movement in the FDI as well from USD 14.59 billion to USD 17.81 billion for the period.
“India will continue to be the best performer among the emerging markets in the current fiscal and the next as the real turnaround in the economic growth is yet to come about, though the sentiment has changed to a AAA type of scenario,” ASSOCHAM President Rana Kapoor said.
As the FIIs inflows continue to pour in, the portfolio investment itself would cross USD 45 billion in the financial year 2014-15. “Even the shuffling of the global portfolios back to the US economy from the emerging markets on the back of recovery in the US economy and end of easy money policy there, has not really impacted India and the investors in the Indian capital market remain very much bullish”, the study noted.
It said while there could be somewhat subdued sentiment towards the end of December because of Christmas and the year-end (calendar) holidays, the inflows would pour in with greater speed in the last quarter of the current fiscal while they remain robust in the third quarter as well.
Likewise, the ASSOCHAM study expects the FDI to cross USD 40 billion and may touch a record figure as is being indicated by several opportunities being discovered by the global companies in the emerging spaces like e-commerce. Easing of rules and the policy in the Railways, construction, Defence etc will show results in the next financial year by which time, some more reforms measures such as higher FDI in insurance would be a reality.
There is a definite change of mood in the external sector environment with results showing on the stable rates of rupee even though rest of the currencies in the emerging pack are being hammered at the hands of the US dollar, added Kapoor.