Foreign Direct Investment (FDI) refers to the quantum of monetary resources that flows in the form of import from other country’s territorial borders to our country. In simplified terms, it is the revenue generated flowing from other countries to our country. Foreign Direct Investment (FDI) is one of the principal revenue generation factors in the income growth indication of a country since it not only determines the economic position of a country’s business environment but is also instrumental in the process of determining how the income would be appropriately regulated among the different investment instruments.
Current economic data reveals that the Foreign Direct Investment (FDI) flow of India has improved 40% to $51.47 Billion in 2020-21 in the April to December Quarter. India has attracted a 22% higher FDI inflow (including reinvested earnings) of $67.54 billion during the first nine months of the current fiscal as against $55.14 billion in the same period of 2019-20. The measures and policies adopted by the Foreign Exchange Authorities of the Central Government, the ability to mobilize the investment sentiment in the economy and reducing the import and export restrictions by removing unnecessary trade barriers and incorporation of import tariff have been the prime reasons behind the growth of Foreign Direct Investment (FDI) flow. Improvement in the FDI Inflow is one of the principal reasons contributing to the growth of economic indicators and thereby leading to a financially liquid situation in the growth of the economic indicators.
Financial Authorities in the country have reported that the improvement in the financial portfolio and increased consumption and purchase activities can be attributed as the principal reasons behind the growth of financial liquidity in the market. Investment propensity has improved drastically, thereby allowing the smooth flow of financial variables.