According to the latest data released by the Reserve Bank of India (RBI) on 19 June 2012, the foreign direct investment (FDI) inflows in India dipped nearly 8 per cent to 7.8 billion dollar during January-April 2012. In the month of April 2012, India registered a decline of 41 per cent to 1.85 billion dollar in its FDI inflow. The country had attracted FDI worth 3.12 billion dollar in April, 2011.
The decline in FDI was largely attributed to policy paralysis on the side of government which apparently stalled several policy reforms in the country. Legislations like retrospective tax laws and persistent inflation only added to the anxiety of global investors, who once considered India as a country with immense economic possibilities.
Services sector with a total of 449 million dollar inflow topped the list of sectors which received the maximum FDI inflow in April 2012.The sector was followed by pharmaceuticals sector at 359 million dollar FDI, construction sector at 120 million dollar FDI and power sector at 68 million dollar FDI.
The country received the highest-ever monthly FDI inflow of 8.1 billion dollar in March 2012. Earlier, the highest figure was 5.65 billion dollar which came in June 2011. Entire FDI inflows for the fiscal 2011-12 clocked 36.50 billion dollar. In the fiscal year 2010-11 the country had registered 19.42 billion dollar FDI, down from 25.83 billion dollar in 2009-10.
In a move that signifies investors’ eroding confidence in India, the international credit rating agencies Standard and Poor's and Fitch lowered India's credit outlook to negative from stable.
What is the difference between Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII)?
FDI and FII both the terms are related to investment in a foreign country. FDI is an investment that a company makes in a foreign country while, FII is an investment made by an investor in the stock markets of a foreign nation.
In FII, the companies only need to get registered in the stock exchange to make investments while, in FDI the investors make investment in a foreign nation.
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