Finance Ministry allays fears of US stimulus withdrawal on FDI

In an attempt to allay fears that FDI inflow would be reversed with the withdrawal of the Quantitative Easing (QE) measures in the USA, a Finance Ministry report has highlighted that India still remains an attractive destination on its own and was the third most preferred nation for FDI since 2010. The report by the finance ministry further pointed that notable liberalizations in FDI policy and several sectors, a globally competitive workforce, a rapid GDP growth rate and rapidly growing market were the growth drivers for FDI in the country. It added that India’s attractiveness on its own merits was announced by the astonishing growth rate of 9.3% in the year just next to 2009, the year of the global meltdown. The US Fed had been buying bonds worth $80 billion a month to stimulate the American economy after the 2009 global financial crisis. It has now started reducing the amount in a phased manner prompting concerns that the move will curtail investments into countries like India. Though, global capital markets and international currencies in several countries, including India, witnessed knee-jerk reactions after news of QE being trimmed by the US Federal Reserve first surfaced last year, after that some sense of stability has been regained. FDI into India, estimated as the sum total of equity inflows, reinvested earnings and other capital, was $46.55 billion in 2011-12 and $34.29 billion in the following fiscal. In 2013-14, the inflows stood at $28.8 billion for the period of April-January.