Fuel the drivers of household consumption and business investment, says Aggarwal
The inflows of Foreign Portfolio Investment (FPI) into the Indian equity markets was Rs.274,034 crore in 2020-21, reflecting steadfast confidence of foreign investors in the fundamentals of the Indian Economy, Finance Ministry said on 6 April 2021.
The robust FPI flows came on the back of faster than expected economic recovery supported by multiple tranches of innovatively designed stimulus packages, the Ministry said.
The Government and regulators had also undertaken major policy initiatives directed at improving ease of access and investment climate for FPIs in the recent past. These include simplification and rationalisation of the FPI regulatory regime, operationalisation of the online Common Application Form (CAF) for the purpose of registration with SEBI, allotment of PAN and opening of bank and Demat accounts etc.
The increase in aggregate FPI investment limit in Indian companies from 24% to the sectoral cap has been a catalyst for increase in weightage of Indian securities in major equity indices, thus mobilising massive equity inflows, both passive and active, into Indian capital markets.
The growth forecast for India in FY 2021-22 have been pegged above 10% by the World Bank, IMF and several global research organisations underscoring that India will continue to remain an attractive investment destination in the near future.
Separately, the PHD Chamber of Commerce and Industry (PHDCCI) noted strong eonomic activity in March with Q4 FY 2021 GDP growth seen at more than 1%.
The series of broad-based policy measures undertaken by the Government during the last 12 months have enhanced the economic activity at significantly higher level, the March month economic activity based on the composite index of three broad economic indicators including GST collections, Passenger Vehicle Sales and SENSEX hits all-time high at 126.6 at a base year of 2018-19 equal to 100, PHDCCI President Sanjay Aggarwal said in a press statement issued on 3 April 2021.
The trend in PHDCCI Economy GPS Index shows that the Indian economy is moving forward in the direction of fast economic momentum to achieve a double digit growth in FY 2021-22.
On the back of robust measures of policy stimulus undertaken by the Government and the announcement of a demand creating, growth oriented and investment stimulating union budget 2021-22, the higher trend of PHDCCI Economy GPS Index to the tune of its all-time high value of 126.6 in March 2021 reinforces the growing business and demand momentum in the country and further the government’s view that the economy is in a V-shaped recovery, said Aggarwal.
Going forward, there is a need to further fuel the drivers of household consumption and business investment for increased aggregate demand, while moving towards a more inclusive economy and ensuring fiscal sustainability, said Aggarwal.
Demand creation will have an accelerator effect on expansion of capital investments in the country. Additionally, greater infrastructural spending by the government would help to stimulate confidence among firms and households, generating stronger consumption, investment, and employment upturns, he said
PHD Chamber of Commerce and Industry (PHDCCI) Economy GPS Index is a composite index of 3 lead economic and business indicators with base year at 2018-19=100, which measures the broad economic and business activity.
The PHDCCI Economy GPS Index, based on the monthly values of three high frequency indicators viz., GST collection (Rs. Crore), Passenger Vehicle Sales (units) and SENSEX (daily average), helps to find the direction of the economy.
The three broad indicators are representing not only demand and supply but also revenue growth of the government and financial markets movement in the country.
GST collections indicate the momentum of business activity, passenger vehicle sales is broad indicator of demand activity in the economy and movement of SENSEX indicate mood of the investors both domestic and foreign and India’s attractiveness to the foreign investors on the back of various reforms undertaken by the government, said Aggarwal. #economy #investment #manufacturing #demand #retail /fiinews.com
