FDI equity inflows rise 40% to $51.5 billion during April-December 2020

By: |
March 5, 2021 4:00 AM

Inflows were boosted by those into the digital sector. Analysts have pointed out that a sizable chunk of these was drawn by Reliance Jio alone.

FDI inflowInvestments remain critical to the country’s economic resurgence, as private consumption has been badly bruised by income losses in the aftermath of the pandemic.

Defying the Covid-induced disruptions, foreign direct investment (FDI) in equities in India surged 40% in the first three quarters of this fiscal to a record $51.5 billion.

Gross FDI inflows — which include FDI in equities, reinvested earnings, equity capital of unincorporated bodies and other capital — rose 22% year-on-year to as much as $67.5 billion between April and December 2020, showed the data released by the commerce and industry ministry on Thursday. Total inflows in December alone jumped 24% from a year earlier to $9.2 billion.

Inflows were boosted by those into the digital sector. Analysts have pointed out that a sizable chunk of these was drawn by Reliance Jio alone.

The FDI inflows take place at a time when domestic private investments have remained elusive in recent years. Investments remain critical to the country’s economic resurgence, as private consumption has been badly bruised by income losses in the aftermath of the pandemic.

According to a report by Unctad in January, India and China were two major “outliers” in a gloomy year for FDI, as global inflows plunged 42% on year in the calendar year 2020 to $859 billion, the lowest level since the 1990s.

While India witnessed a 13% year-on-year rise, the highest among key nations, in FDI inflows in 2020, China’s rose 4%. Of course, in absolute term, China remained way ahead, with an inflow of as much as $163 billion, while India’s stood at $57 billion.

The Unctad report had pointed out that the UK and Italy saw an over 100% crash each in FDI inflows in 2020, followed by Russia (96% drop), Germany (61%), Brazil (50%), the US (49%), Australia (46%) and France (39%).

Although a contraction in gross fixed capital formation reversed a 46.4% year-on-year slide in the first quarter to register a rise of 2.6% in the three months through December, it still remained far below trend. Private consumption, meanwhile, shrank at a faster pace of 2.4% in the December quarter.

With the businesses going through the reset phase after the substantial lifting of the lockdown curbs, the government hopes to make a sustained push now to draw investors.

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