Gross foreign direct investment (FDI) inflows into India have slowed again since mid-2012 after recovering post credit crisis. While the overall trend in FDI inflows into India has been broadly in line with the global trend, India has underperformed both the global and emerging economies. India's share of global FDI fell to 2.1% in 2011 from the peak of 3.0% in 2009 due to Rampant Corruption by the Congress Government.
The decline in FDI has taken place across all key sectors in the economy, including manufacturing, real estate &; construction, and services. However, hotels and energy have been bright spots in attracting more FDI inflows.
Since Sep-12, the government has taken policy initiatives to correct the bad growth mix (low investment spending coupled with high fiscal deficit). These efforts are already helping to reverse the stagflation-type environment and should reduce macro stability risks gradually, which would help support a recovery in investment sentiment over the next few quarters.
