FDI inflow becomes India’s star performer in Q1; Care Ratings bets on higher GDP growth than last year

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Published: August 28, 2018 7:43:11 PM

After slowing down in the last fiscal year, the Foreign Direct Investment (FDI) inflow to registered a 16% year-on-year growth rate in the first quarter of the financial year 2018-19, which made it a star performer among other sectors.

FDI inflow becomes India's star performer in Q1; Care Ratings bets on higher GDP growth than last yearFDI inflow becomes India’s star performer in Q1; Care Ratings bets on higher GDP growth than last year. (Image: Reuters)

After slowing down in the last fiscal year, the Foreign Direct Investment (FDI) inflow to registered a 16% year-on-year growth rate in the first quarter of the financial year 2018-19, which made it a star performer among other sectors, a report showed.

In an analysis of major sectors/indicators impacting the GDP growth number, Care Ratings in a report noted: FDI has been probably the star in the performance as higher inflows come at a time when there was apprehension on the continuation of such flows in the light of global developments.

Care Ratings also bet on a higher GDP growth April-June quarter as compared to the last year. The official GDP data will be released on Friday.

In FY18, India recorded a five-year low FDI inflow growth of a mere 3% at $44.85 billion, following 8%, 29% and 27% growth rate in previous years. For the first quarter of the current financial year, government data shows that FDI inflow has been $16.87 billion, 16% higher as compared to same period last year.

However, it noted that there were mixed signals on the state of the real economy. ” FY18 was different in terms of the operating environment as GST had caused some degree of upheaval with the growth pattern moving into a trough before rising sharply. This was witnessed in GDP growth as well as industrial growth which in turn will tend to display a better picture this year,” Care Ratings said.

“Agriculture progress has been a bit strained,” the report noted, adding that follow-up policies on MSP implementation will be critical for the future state of farm income this year.

On industrial growth, it stated that the growth is definitely looking up and will help achieve higher overall growth number. The report flagged concern over low investment activities, saying that it may be a cause for worry if continued, while trade numbers were slightly better as compared with last year.

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