India's 2010 FDI falls 30%
2011-08-26 10:45:58
Analysts have said corruption in India is hard to stamp out, and that is why its foreign direct investment (FDI) has fallen.
According to the United Nations Conference on Trade and Development, India's share of global FDI fell 30 per cent to about US$24 billion in 2010.
This is while investments to emerging economies rebounded after a dip in 2009.
In the same period for example, FDI to China grew 11 per cent while FDI to Southeast Asia rose 110 per cent.
IHS Global Insight Asia Pacific chief economist Rajiv Biswas said: "I think there's also significant domestic issues at the moment around the investment climate, that are particularly affecting the approvals process.
"But also, I think at the moment, there's quite a big concern about the corruption scandals that are going on in India.
"In fact, corruption could be more detrimental to India's economy than the uncertainty in world markets right now, because of its relatively low dependence on exports."
Meanwhile, Barclays Capital economist Rahul Bajoria said: "India is one of the biggest importers of commodities in the region.
"It's probably the only big country in the region which runs a current account deficit so if we see a global slowdown and we see a correction in commodity prices, that will actually provide a positive terms of trade shock for the country.
"And that could mean an upside for the Indian rupee, and an improvement in its balance of payments position."
With inflation at a stubbornly high nine per cent despite interest rate hikes over the past 18 months, a slowing global economy could aid India in its inflation fight.