FDI flow halts, about to reverse plunging Indian economy into deep depression



Feb. 8, 2009

The FDI inflows of $19.7 billion between April-November have made it amply clear that the current year's target is far too ambitious to be achieved, given the recession in the US and several other developed economies. India received just $1 billion foreign direct investment in November as fund flow turned to a trickle. It is expected that in December and January, the net inflow transformed into net outflow.

This has created havoc in Indian outsourcing industry especially in IT and call center businesses with massive lay off and liquidation of infrastructure. The overall Indian economy is headed for deep prolonged long-term depression.

The FDI inflows of $19.7 billion between April-November have made it amply clear that the current year's target is far too ambitious to be achieved, given the recession in the US and several other developed economies - the source of cross-border investment.

After maintaining robust inflows till September - with a monthly range of $2.5-3 billion - FDI in October slipped to $1.4 billion and further to $1.08 in November, according to official figures.

While the foreign investment, other than the stock route remained lackluster in the comparable period last year as well, it came like flash floods - $10 billion - in the last two months of the fiscal 2007-08. Last year's total FDI inflow was $24.5 billion.

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