The Government of India has debunked the propaganda article published in The Hindu on 2 June 2021 over the surge in FDI inflows for the year 2020-21. In its official response, the Indian government has said that the author has misconstrued data to arrive at the conclusion he made in his article, alleging that he had challenges in interpreting data released by the Reserve Bank of India.
The article titled “What explains the surge in FDI inflows?” published in The Hindu sought to decipher the reasons for the spike in the FDI flows in the country. The rebuttal from the government says the author erroneously considered FDI inflows of USD 81.72 billion (Row 184.108.40.206) includes amounts attributable to ‘repatriation/disinvestment’ (Row 220.127.116.11) and ‘FII investments’ (Row 1.2.2).
“The RBI data is purported to be analysed to arrive at the erroneous conclusion that the surge in FDI inflows to USD 81.72 billion in 2020-21 (an increase of 10% over the previous year) is attributable to an increase in amounts attributable to ‘repatriation/disinvestment’ and ‘FII investments’,” the statement issued by the Government of India said.
FII investments are different from Foreign Direct investments, FII investments not included to calculate FDI inflows for 2020-21
It further said that FII investments are different from Foreign Direct Investments and that FII investment amounts have not been included to calculate the FDI inflows for 2020-21. “FII investments of USD 38 billion in 2020-21 (Row 1.2.2) has been categorised separately by the RBI and does not form part of the FDI inflow figure of USD 81.72 billion (Row 18.104.22.168) for the 2020-21 period. Consequently, foreign exchange inflows pursuant to ‘FII investments’ will not impact the calculation of FDI inflows,” the statement said.
“If the intention of the author was to demonstrate the staggering increase in aggregate foreign exchange inflows under the FDI and FII routes, USD 119.8 billion should have been the figure to be quoted by the author. Aggregate foreign exchange inflows under these routes has witnessed an increase of 59.88% over the corresponding figure of USD 74.94 billion in 2019-2020,” the Indian government said.
‘Repatriation/disinvestment’ not accounted in the calculation for the FDI inflows for 2020-21
Furthermore, the Indian government said the author had wrongly included ‘repatriation/disinvestment’ into account to calculate the FDI inflows for 2020-21. Busting the incorrect analysis published in The Hindu article, the Centre said the author had wrongly attributed the amounts in respect of ‘repatriation/disinvestment’ to investments from private equity funds and also seems to suggest that the ‘repatriation/disinvestment’ amount has been taken into account to calculate the FDI inflow figure of USD 81.72 billion (Row 22.214.171.124).
It also informed that the ‘repatriation/disinvestment’ of USD 27 billion in 2020-21 (Row 126.96.36.199) has been categorized separately by the RBI and it does not form a part of the FDI inflow figure of USD 81.72 billion (Row 188.8.131.52). As a result, the government said ‘repatriation/disinvestment’ will not impact the calculation of FDI inflows.
“To reiterate, India has attracted the highest ever FDI inflows of USD 81.72 billion over 2020-21 higher by 10% over the corresponding figure in 2019-20. FDI inflows remained buoyant despite challenges associated with the Covid-19 pandemic and the national lockdown. The Government of India has put in place a stable, predictable and transparent policy environment and continues to take measures to develop infrastructure, improve the business environment and liberalize the FDI policy regime. The effects of these actions will continue to deliver results in the years to come,” the statement said.