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FDI data cannot be taken on face value; RBI needs to regenerate it: Experts

Press Trust of India  |  New Delhi 

Pointing out discrepancies in data, a study by two renowned experts has suggested that the RBI should regenerate foreign fund inflows and outflows data with detailed information at least for the past five years with a view to providing a more realistic picture of overseas investments.

(FDI) inflows database cannot be taken on its face value due to various shortcomings, the study outlined.

"While the annual aggregates do not provide adequate guidance regarding year-to-year changes, the sectoral reporting has some serious limitations ... Besides these weaknesses in reporting, in must also be read in light of disinvestments and repatriation of capital, which are adversely impacting on the gross inflows to a significant and growing extent," it added.

The report was prepared by K S Chalapati Rao, (Retd), in Industrial Development (ISID), and Biswajit Dhar, Professor,

The data limitations on inflows include "delayed reporting, duplicate reporting, incorrect entries, notional inflows, inappropriate industrial classification, and round-tripping by large global corporations".

It said that FDI data reporting has to be improved drastically in order to properly understand the contribution of the overseas investments.

The study also suggested that along with a review of the FDI policy, the reporting mechanism should be reviewed to make the data on inflows facilitate drawing of "meaningful inferences and to provide guidance to policy makers and other national and international analysts".

"The RBI should regenerate the inflows/outflows data with enhanced information content, at least for the past five years. Further reporting of inflows could follow in that pattern," it added.

FDI was USD 44.85 billion in 2017-18 as compared to USD 43.47 billion in the previous fiscal, showing a growth rate of 3 per cent -- the lowest in past five years. FDI inflows were worth USD 40 billion in 2015-16.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, July 17 2018. 16:25 IST
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