FDI flows into India

How much did India receive in Foreign Direct Investment (FDI) every year, until March 2016? As with statistics, it depends on whom you ask and it also depends on what your definition is. Let us take Financial Times. They have a sister concern called fDi Intelligence. According to them, India received USD63.0bn in 2015, calendar year. But, they quietly add that these are ‘announced’. In the footnote under the table, it says that the number is an estimate.

Newspapers in India and some government functionaries – Ministers and some high-profile bureaucrats – have been putting out a figure somewhere between USD50-60bn. for 2015. One cannot blame them. That is what the Department of Industrial Policy and Promotion (DIPP) puts out.

Their monthly FDI bulletin had changed into a quarterly bulletin starting from the second half of last year. Whoever created the file forgot to spell ‘Quarterly’ correctly. They need to fix that. But, that is easily fixed. How does DIPP data compare with RBI Balance of Payments (BoP) data, prepared in accordance with standards prescribed by the International Monetary Fund – Data Dissemination Standard?

Some interesting facts emerge.

FDI flows into India

It is clear that DIPP had chosen to depict gross FDI flows. It does not subtract Indian FDI in foreign lands.

Second, its data and RBI data on gross FDI inflows into India matched right up to the year ending March 2009. From the year ending March 2010, it began to diverge. DIPP had begun to overstate the FDI. Both RBI and DIPP use the same definition: equity capital + reinvested earnings  + other capital flows. So, that is not the source of divergence.

Since the year ending March 2010, in the last seven years, DIPP overstatement has averaged 23%. The most egregious overstatement was in the year ending March 2012.  RBI figure was USD32.95bn. DIPP figure was USD46.56bn.  The next biggest divergence was in the year ending March 2015 (31%). RBI figure was USD34.43bn. DIPP figure was USD45.15bn.

Third, it is interesting to note that Indian FDI overseas began to surge from the year ending March 2006 and continued right up to the year ending March 2014 – nine years. In the last two years, they have curtailed their overseas ambitions drastically. Hence, in the last two years, gross and net FDI flows are rather close.

Fourth, it appears to be the case that India’s gross FDI crossed USD50bn in the year ending March 2016. It came pretty close to that number, even on a net basis (USD48.2bn). This is the highest in absolute dollar terms. As a percentage of GDP, perhaps, the figure was better in the year ending March 2009. It must have been close to 4% then. For the year ending March 2016, it might be close to 2.5%.


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