FOREIGN direct investment in India nearly halved in January from a year earlier, data showed today, despite the country’s strong economic growth.
Foreign direct investment (FDI) slumped 48 per cent to $1.04bn (£642m) in January from $2.04bn (£1.25bnm) in the same month last year, official data revealed.
FDI in India has been dropping amid concerns over corruption, bureaucratic delays, rising inflation and perceived government resistance to opening up the economy.
“These are worrisome figures. The government will have to look at long-pending (economic) reforms to boost foreign investment,” said Rupa Rege Nitsure, chief economist with the state-run Bank of Baroda.
In the 10 months to January of the current fiscal year to March 31, FDI fell 25 per cent, compared with the same period a year earlier, to $17bn (£10.48bn).
In 2009-10, the country’s FDI had declined to $25.88bn (£15.96bn) from $27.33 (£16.86bn) in the previous financial year.
Foreign investment is vital for India, which needs to fund a $1 trillion scheme over the next five years to overhaul its dilapidated ports, airports, highways and other infrastructure seen as key to boosting economic growth
Finance Minister Pranab Mukherjee said last week the government was discussing ways to further liberalise foreign direct investments which could trigger more capital inflows.
“Discussions are under way to liberalise foreign direct investment policy,” Mukherjee told an international financial conference, without elaborating.
India is expecting nine percent growth next year, up from 8.6 per cent this year, but many economists are sceptical about the target, saying aggressive monetary tightening to rein in high inflation could slow expansion.
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