FDI inflows on the up, double in May over last year

In an apparent contradiction of the general perception that foreign direct investment has slowed down due to an apparent paralysis in decision-making by the government following a series of financial scandals, FDI in the country more than doubled in May from the same period a year ago, touching $4.66 billion against $2.21 billion in May last year.

According to data released by the department of industrial policy and promotion (DIPP), this is the second month in a row when FDI inflows have surged. During April and May 2011, FDI inflows shot up 77 per cent to $7.79 billion, as against $4.39 billion during April-May last year.

This is the highest monthly inflow in 39 months, according to Bloomberg data. In February 2008, just before the global financial crisis, inflows were estimated at $5.67 billion.

"The recent trend of dip in FDI inflows appears to have been reversed in the current financial year, where a significant upward trend in the FDI inflows is evident," a DIPP statement said.

It added that the FDI rise is a result of a series of steps initiated by the government over the last few months, such as consolidating the guidelines and liberalising the norms for sectors such as limited liability partnerships.

However, the boost is also attributed by investment experts to improved sentiments overseas as developed economies get over the financial crisis of 2008-09. Besides, the growth figures also look better as they are over a smaller base.