The foreign investors gained a total of $15.07 billion from their investments in India, resulting in 30 per cent higher returns in Q3’2021.
Compared to the statistics of Q3’2020 when the investment income of foreign investors was $12.2 billion, a 30 per cent rise was witnessed, according to the latest balance of payments data released by the Reserve Bank of India.
This 30 per cent higher return from the investments of foreign investors in India is significant as it went through a turbulent time after the Covid-19 slump in the economy due to the nation-wide lockdown.
It is not the returns on record portfolio flow during the quarter but the returns on FDI investments and servicing of bonds and NRI deposits that caused the surge in investment income outflows, an analysis of the newer format of the balance of payments data shows.
Only $1.9 billion is on the account of profits out of portfolio investments of the $15.07 billion repatriated by foreign investors during the quarter.
Even during the pandemic and continuous lockdowns, India has seen a consistent flow of foreign investments, both, through the FDI route as well as portfolio route. In Q3’2021 itself, the foreign trade amounted to $38 billion.
As of March 19’20, the foreign exchange reserves reported by the Reserve Bank has been around a record $582 billion. “Investments in India are increasing. As a result, primary income and dividend arising out of such income are also increasing. It is a side effect of such large outflows,” said Rahul Bajoria, chief India economist at Barclays Capital.
Underlying the current account deficit in Q3: 202-21 was a rise in the merchandise trade deficit to $34 billion from $14.8 billion in the preceding quarter, and an increase in net investment income payments” RBI said in a release on Wednesday.
