Finance Ministry: Withdrawal of fiscal stimulus programme in US will not affect much the foreign investments into India

The Finance Ministry has tried to lessen fears that the withdrawal of fiscal stimulus programme in the US will affect foreign investments into India. A report by the Finance Ministry alleviates the fears saying India is an attractive destination with its liberal FDI policy, a globally competitive workforce, a rapid GDP growth rate and rapidly growing market and has remained the third most preferred nation for FDI since 2010.
The US has already begun tapering of its Quantitative Easing (QE) or fiscal stimulus programme. In 2013, capital markets and currencies across the world, including India, witnessed knee-jerk reactions at the news of QE reduction by the US Federal Reserve.  The US Fed had been purchasing bonds worth $80 billion a month to stimulate its economy after the 2009 global financial crisis. It has now started trimming the amount in a phased manner prompting concerns that the step will slash investments into countries like India.
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.

Month: Current Affairs - May, 2014