Foreign investors continue to flee even after Modi’s Rs 21 lakh cr economic package

Rs 6,066 crore was pulled out from the Indian market on the next day of Modi’s economic package announcement.

FDI, foreign direct investment, FDI may steeply fall in 2020, attract foreign fundsd

Even as the Narendra Modi government aims to attract more foreign investors to India by liberalising the policies and laws, it has not helped to lift sentiments across foreign portfolio investors. The FPI investors have been pulling out their investments from the Indian market every day even after PM Modi announced an economic stimulus package as big as Rs 20 lakh crore on May 12. Immediately the next day of the announcement, Rs 6,066 crore was pulled out from the Indian market, according to the data provided by the National Securities and Exchange Limited (NSDL).

In fact, in the last six working days, the foreign portfolio investors have withdrawn a total of Rs 21,308 crore from the Indian market. The flight of foreign investors has been continued since the month of March when coronavirus cases started to show in India. The month saw a net pull out of over Rs 1 lakh crore, which was a record-high. Even since, the foreign investors have been a net seller in the subsequent months.  

Also Read | ‘Don’t worry about rating downgrades’; RBI’s Shaktikanta Das says India will keep getting FDI, FPI

While various rating agencies have downgraded India’s ratings due to lockdown and slow economic growth, its effect on investors’ sentiment is still a hot topic of debate. However, RBI Governor Shaktikanta Das said that it is the government’s policies, macroeconomic fundamentals, and the outlook that matters the most for foreign investors. He had added that despite a major economic downturn superimposed on a deep slowdown in India, foreign investors’ trust in India is intact. 

Irrespective of rating upgrade or downgrade, India has continued to enjoy the trust of foreign investors, both in terms of foreign portfolio investment (FPI) and foreign direct investment (FDI), Shaktikanta Das had further added. Meanwhile, PM Modi has asked the states to ramp up efforts to attract more foreign investors towards India. 

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First published on: 21-05-2020 at 17:58 IST