Union finance minister Nirmala Sitharaman has said Indian retail investors have put in faith in the stock markets and have created such capacity to cushion the shock due to outflow of foreign funds that may have created market volatility. In a reply to a question at the Lok Sabha, Sitharaman said India continues to remain the highest receiver of the FDI.
Interest rates are the key factors in terms of inflows from foreign portfolio investors (FPI) and foreign institutional investors (FII), who depend on the same and can be lured by better interest rates and prospects in other countries, the finance minister said in her reply to a question asked by Congress leader Shashi Tharoor on Monday. Foreign investments have to be gauged, not just by looking at FIIs and FPIs which by very nature depend on the interest rates and they keep on “moving up and down," she added.
“With fairness and objectivity, if the inflow of FDI remains unabated and India is the highest receiver of FDI since before covid and it continues significantly even during covid and subsequently also, that indicates that the money coming in is staying invested in this country, thereby creating jobs and prospects for us, and not FIIs and FPIs," Sitharaman said in the reply to the question.
“The FIIs and FPIs would come and go. But, today the Indian retail investors have proven that even if they come and go any shock that may come in is now taken care of because of the shock absorbing capacity that the Indian retailers have brought into the Indian market," she said during Question Hour.
“We in the House should should stand up and appreciate the Indian retailer who has invested a lot of confidence in the markets today in India," the minister added.
Tharoor in his question had urged Sitharaman to explain the concerning trend of “steadily" declining foreign investments in India, pointing out that investors outside the country had withdrawn over Rs 1.14 lakh crore from the Indian market so far. The veteran leader had also sought answers on what measures the government had taken to reverse this situation.
“The FPI and FIIs obvious obviously going to be very typical of their very nature coming and going out. But, what’s there to look at with fairness and objectivity is the inflow of the FDIs which is remaining unabated," Sitharaman said in her reply.
“India is the highest receiver of the FDI since before covid and that continues very much significantly during covid and subsequently also," she added.
“It is that which indicates if the money, which is coming in, is staying invested in this country, thereby creating jobs and prospects for us, not by the FIIs and FPIs," the minister further said.
In the clarification of another question, Nirmala Sitharaman said the GST Council has not recommended reducing the rate of health insurance from 18 per cent even as the cost of the same has shot up during the pandemic.
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