FDI Alone has fully funded India’s Current Account Deficit

India’s foreign direct investment (FDI) will remain at last year’s elevated levels, though the FDI inflows momentum may wither and the incremental gains over the next few quarters may not be limitless, according to HSBC. Pranjul Bhandari and Dhiraj Nim underscored in their May 3 research note titled “India’s external sector bounty” that India’s overall FDI will be sufficient to fund its current account deficit.

India’s FDI inflows doubled in 3 years

Highlighting the robust FDI inflows India has been witnessing during the past three years, the HSBC analysts point out that India’s FDI inflows doubled from US$22 billion to US$46 billion between 2013 and 2016. As the strong inflows were also coupled with a drop in FDI outflows, India’s economy witnessed...