StatsGuru: Tracking India's foreign direct investment story

The government's recent emphasis on increasing foreign direct investment (FDI) has led to questions as to how well India has been doing on FDI of late. As Table 1 shows, over the past year, FDI has seen some wild swings. At the time last year when it seemed like the government was getting its reform act together, it surged upwards - only to fall to nearly zero shortly thereafter, as hopes were belied. Since then, it has edged cautiously upward. Overall, as Table 2 shows, since 2000 FDI has largely tracked India's growth performance. It increased sharply in the years after 2004, driving India's economic growth up. But then, after the 2008 financial crisis, it showed a downturn that was only temporarily reversed in the time of extraordinary global liquidity associated with loose monetary policy worldwide. In that time, since 2000, as Table 3 shows, the services sector received by far the largest share of FDI. Knowledge-intensive sectors like pharma, IT, and telecom were also in the top 5. Other than construction, the hard infrastructure sectors didn't do too well. Indeed, over the past couple of years in particular, as Table 4 reveals, there has been a fall-off in FDI in pretty much every sector except services, reflecting the pattern of slowdown in the Indian economy. Power, infra and telecom saw particularly sharp falls between 2011-12 and 2012-13. This has led to structural problems - such as an overdependence on foreign institutional investment. As seen in Table 5, FIIs too have soured of late on the India story - judging by the fact that net FII flows have turned negative - leading to worries about external weakness. In addition, as Table 6 shows, much FDI is of doubtful origin, and that problem is getting worse. Far from closing the Mauritius route, India is ever more dependent on it. (Click here for tables)