Foreign investors not unduly worried about economy: Govt

Foreign investors not unduly worried about economy: Govt New Delhi: The government has said market indicators do not suggest that foreign investors are "unduly worried" about the economy even as global rating agencies are sounding bearish on India.

Minister of State for Finance Namo Narain Meena said in a written reply in Rajya Sabha yesterday that foreign investors make investments on the basis of perceptions of the returns and risks associated with the economy.

"With regard to the performance of the Indian economy, market indicators, such as the net inflow of foreign institutional portfolio investment to India, do not suggest that investors are unduly worried," Meena said.

He was replying to queries related to inflation and actions of rating agencies like Standard & Poor's and Fitch. The two have revised the outlook on India's long-term rating from stable to negative.

The net FII inflows (debt plus equity) in the first seven months of 2012 have recorded "appreciable growth" and were USD 14.98 billion as on July 31.

"This is the highest inflow during the corresponding period (first seven months of each calendar year) in the last one decade, save for the year 2010," Meena said.

Equity inflows during January-July have also been highest as compared to the corresponding period in the last one decade except for 2007 and 2010.

"High inflows in equity segment are a reflection of the confidence of foreign investors in the strong macroeconomic fundamentals of Indian economy," the minister said.

Meena further said recent steps announced by Finance Minister P Chidambaram to overcoming the challenges being faced by the economy would help in creating a more positive operational environment for business and investment.

Replying to another question, the minister said all the four non-life public sector insurance companies have been incurring underwriting losses over a period of time.

"It has, therefore, been felt necessary to contain the losses to improve their financial health so that they continue to serve in the best interests of the public and economy as envisioned of them," he said.

Advisory instructions have been issued to them to achieve this objective through prudent underwriting and efficient claims management, Meena added.

Meanwhile, Minister of State for Finance S S Palanimanickam told the House yesterday that the number of PSUs to be disinvested has not been fixed.

"...However, all efforts are made to achieve the Budget Estimate of Rs 30,000 crore through disinvestment," he added.

About Rs 13,894 crore were raised from disinvestment in 2011-12 against the Budget target of Rs 40,000 crore.

PTI