FDI: QUALITY OF INFLOW, IMPACT QUESTIONED

With $60.08 billion foreign direct investment, or FDI, coming in during 2016/17 (an all-time high), India’s ability to attract foreign investors is indisputable. The government rightly deserves credit for the policy tweaks – liberalising and simplifying norms for investors – to attract FDI in a big way. These numbers, however, are not reason enough to celebrate. The quality of inflows and their contribution to the growth of the economy, job creation and manufacturing capacities need to be carefully analysed. Two Delhi-based economists examined the FDI inflow to India over the last three years. The preliminary finding raises concerns that several of these investments will not be able to trigger additional economic growth. Also, it debunks the government’s claim that FDI has benefited ‘Make in India’. India needs policy measures that can trigger real change.