‘Strong fundamentals will help India attract foreign investments’

NEW DELHI: Asserting that the Indian economy is showing signs of revival since the peaking of second Covid wave in May, the government on Monday said the country’s strong fundamentals and market size will continue to attract marketseeking greenfield investments.

Quoting the World Investment Report 2021, the finance minister Nirmala Sitharaman in a written reply to Lok Sabha said FDI inflows into India rose by 25.4% to reach $64 billion in 2020, from $51 billion in 2019, becoming fifth largest recipient in the world in 2020, up from eighth position it held in the previous year.

However, the announced greenfield projects in India contracted by 19% in 2020, she said, adding that this decline is significantly lower than the 44% decline in developing economies.

“As has been witnessed in overall FDI inflows, India’s strong fundamentals and market size will continue to attract market-seeking greenfield investments,” she said.

In a reply to another question, minister of state for finance Pankaj Chaudhary said, India’s forex reserves as on June 25, 2021 stood at $608.99 billion.

“India’s foreign exchange reserves position is comfortable in terms of import cover of more than 18 months and provides cushion against unforeseen external shocks. The government and RBI are closely monitoring the emerging external position calibrating policies or regulations to support robust macroeconomic growth,” he said.

With regard to India’s contraction in gross domestic product (GDP) by 7.3% in 2020-21, Sitharaman said this reflects the unparalleled effect of the ‘once in a century’ Covid-19 pandemic and the containment measures that were taken to control the pandemic.

The fundamentals of the economy remained strong as gradual scaling back of lockdowns, along with the astute support of Aatmanirbhar Bharat Mission placed the economy firmly on the path of recovery from the second half of FY 2020-21, she added.

According to the World Bank’s Global Economic Prospects June 2021, she said, global growth for 2021 has been revised upward to 5.6%, largely due to the sharp rebound in major economies driven by continued vaccination and substantial fiscal support.

India is expected to grow at a significantly faster rate compared to the global average growth.