IMPACT OF ECONOMIC REFORMS ON FDI IN INDIA: POST REFORM PERIODS

Table 2 provides financial year wise foreign equity inflows since 1991 which acts as a testimony of the liberalisation process. The reforms undertaken in India since 1991 have unleashed the potential growth of the economy and stimulated trade, Outsourcing and the entry of multinational enterprises under the banner FDI. India now has become one of the attractive destinations for overseas investment as adduced by FDI inflow figures of India which have reached a historic high in recent years and as ranked 3rd among the most attractive locations for foreign investments by UNCTAD. The total foreign equity capital inflows from August 1991 to March 2011 amounted to Rs.5, 81,256 crores. India’s actual FDI inflows grew at a higher pace during the period between 2004 and 2009 than any other period before. Although, FDI inflows have posted an impressive growth for the fourth year in a row between 2005- 2009, there are apparent sign of foreign direct investment slowing down due to global economic slowdown and debt crisis. The decrease in foreign equity inflow during the financial year 2010-11 compared to the previous was 28%. It is palpable that unless the on going international financial crises is resolved FDI inflow in to India in the coming years will further deteriorate as the crisis would adversely affect transnational corporations’ spending abilities.

Table 2 FDI EQUITY INFLOWS (Amount Rupees in crores)_

Financial Year Equity 

Inflows

Financial Year FDI equity Inflows
1991-1992 409 2001-2002 19,361
1992-1993 1,094 2002-2003 14,932
1993-1994 2,018 2003-2004 12,117
1994-1995 4,312 2004-2005 17,138
1995-1996 6,916 2005-2006 24,613
1996-1997 9,654 2006-2007 70,603
1997-1998 13,548 2007-2008 98,664
1998-1999 12,343 2008-2009 1,23,025
1999-2000 10,311 2009-2010 1,23,120
2000-2001 12,645 2009-2011 88,520

Sources: Dept. of Industrial policy & promotion, Government of India

Representative APR 391%

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