The net foreign direct investment (FDI) inflow in India is expected to improve sharply to USD 19.5 billion during FY 12 as compared to USD 7.1 billion in FY 11 on account of robust and sustainable economy, the Centre for Monitoring Indian Economy (CMIE) said in its monthly review here.
The monsoon is likely to play an important role in the Indian economy. The monsoon and the sowing in the current year are going well and this fortifies the economic growth story of the current year, the review said.
CMIE observed that as far as the interest rates in the international markets remain low, the liquidity remains "very healthy" and is likely to find its way into the Indian economy.
According to CMIE, though the portfolio inflows are expected to be lower they will stay healthy at USD 26 billion, while the External Commercial Borrowings (ECB) are expected to remain high at USD 9 billion even though the one-time demand for overseas borrowings from telecom companies in FY 11 for spectrum payments would not be there in FY 12.
The overseas borrowings would be driven in the current year by the very high domestic interest rates and the low interest rates in the international markets, CMIE added.