India has now emerged as one of the most open economies in the world for receiving foreign direct investments (FDI), on the back of a host of liberalisation measures, the Economic Survey said on Saturday.
According to PTI report, It pointed out that measures taken by the government have resulted in FDI equity inflow of $43.4 billion in 2016-17, which is not only an increase of 8% over the previous year, but also the highest ever. The mid-year survey of the economy described FDI as an enabler of economic growth since it enhances productivity by bringing capital, skills and technology to the host country.
“In 2016, the government has brought most of the sectors under the automatic approval route, except a small negative list comprising atomic energy, manufacture of cigars and tobacco, real estate business, lottery, gambling and chit fund etc. With these changes, India is now one of the most open economies in the world for FDI,” said the survey tabled in Parliament on Saturday.
The survey is drafted by the CEA and his team of economic advisors in the finance ministry. Arvind Subramanian has been, in the recent past, critical of the MPC over its refusal to cut key interest rates in the face of low headline retail inflation. However, in its policy meeting earlier this month, the MPC did cut repo rates by 25 basis points. In June, Subramanian had reacted quite strongly when the MPC held rates.
“In recent times, seldom have economic conditions and the outlook warranted substantial monetary policy easing.” He had said that not just headline prices, but core inflation had declined as well and indicated that the Reserve Bank’s “inflation forecast errors have been large and systematically one-sided in overstating inflation.”
In terms of the sectors receiving FDI equity inflows, services (finance, banking, insurance etc.) sector received the highest (19.9%) followed by telecommunications (12.8%) and computer software and hardware (8.4%), the survey added.
Mauritius, Singapore and Japan have been top three source countries of FDI inflows to India contributing 36.2%, 20% and 10.8%, respectively, during 2016-17, according to the survey.