Indian central bank vows to bring inflation down to 4%
India’s most senior banker, Reserve Bank of India Governor Shaktikanta Das, has reiterated the RBI’s commitment to bringing down the inflation rate to 4%.
However, he warned that despite the bank’s best efforts the Indian economy was vulnerable to “frequent global supply shocks”, which he said can have significant implications on managing inflation.
Speaking at a lecture at the Delhi School of Economics, Das said the RBI was aware of the effects inflation had on both businesses and individuals, and would intervene where it was necessary. “It is necessary to be watchful of any risk to price stability and act timely and appropriately, in these circumstances”, he said. But he reiterated: “We remain firmly focused on aligning inflation to the target of 4%,” although he did not give a time frame for when this would be achieved.
He also said that inflation, which had touched a high of 7.4% in July, had started to moderate. The government has mandated the central bank to maintain inflation between 2% and 6%.
U.S. is leading investor in India, new figures show
The United States was the leading source of foreign direct investment (FDI) in India during the fiscal year 2023 (FY23), according to research by the Reserve Bank of India (RBI).
The data also showed that Mauritius, the U.K. and Singapore were the next most-important investors behind the United States, collectively contributing 60% of the total FDI inflow into India.
In terms of market value, total FDI reached Rs 50 lakh crore in FY23, equivalent to $600bn.
Specifically, the United States brought in Rs 8.58 lakh crore ($103 billion) in FDI during FY23, up from Rs 8.05 lakh crore in the previous financial year, representing a 17.2% share of the total FDI.
Mauritius’s FDI to India was recorded at Rs 7.43 lakh crore (compared with Rs 7.79 lakh crore in FY22), accounting for a 14.9%, while the U.K. contributed Rs 7.08 lakh crore (compared with Rs 5.83 lakh crore in FY22).
The RBI drew on information relating to foreign liabilities and assets (FLA) data, which includes cross-border assets and liabilities of various entities such as companies, limited liability partnerships, alternative investment funds and partnership firms engaged in inward and outward direct investment (ODI).
Out of the 38,689 entities surveyed, 33,850 reported their FDI and ODI on their balance sheets as of the end of March 2023. The central bank said that more than 97% of organisation that took part in the survey were unlisted as of March 2023 and accounted for a significant portion of the FDI equity capital in India.
When it comes to outward direct investment (ODI) by Indian entities, Singapore, the United States, the U.K. and the Netherlands were among the top destinations, receiving 60% of the total Rs 9.1 lakh crore ($109 bn) invested during FY23.
The total ODI by Indian firms increased by 19.5% in FY23; the figure in the previous year was Rs 7.62 lakh crore in the previous year, according to the RBI study.
Singapore was the largest recipient of ODI from Indian firms, receiving Rs 2.03 lakh crore ($24.5 bn), accounting for around 22.3% of the total ODI during FY23.
The United States received Rs 1.24 lakh crore (13.6% share), and the United Kingdom received Rs 1.16 lakh crore (12.8% share) from India in terms of ODI during the same fiscal year.
The census also highlighted that the market value of FDI in India increased by 6.9% in rupee terms during FY23, primarily due to the rise in FDI in unlisted companies.
- The full RBI survey can be accessed at https://tinyurl.com/y9bkp8xv
