Showing the sign of slowing global economy, Foreign Direct Investment (FDI) in India extended its decline in May with inflows slipping to $1.32 billion from $4.66 billion in the same month last year. The more alarming thing is that the FDI is declining at a time when India's economic growth has slipped to 9 year low of 6.5% in 2011-12, while in the last quarter it was merely 5.3%.
Foreign fund inflows in April almost halved to $1.85 billion from $3.12 billion in April 2011, which is likely to keep the balance of payments under pressure and could also impact the already depreciating rupee. Further if the commodity and oil prices increases globally, a weaker domestic currency will add to inflationary pressures.
As per reports, maximum FDI inflows in May were received from services of $754 million, pharmaceuticals $401 million, construction $181 million and power $100 million. Country wise in May, India received the highest FDI from Mauritius $1.12 billion million, followed by the Netherlands $409 million, the UK $378 million, Singapore $231 million and Cyprus $177 million.
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