FDI bulks up as India follows IMF maths

NEW DELHI: India’s bid to make foreign direct investment (FDI) estimation compliant with the IMF norms is set to make substantial difference in the country’s official FDI figures. Even as the RBI has captured part of these unaccounted data, the figure has risen from about $3.9 billion in 2001-02 to $5.4 billion in 02-03, a spurt of about 40%, said senior officials.
The enhancement of the FDI data is due to incorporation of more items like earnings reinvested by MNCs operating in India and intra-corporate debt transactions. Partial capturing of these two modes of inflow of foreign investment itself has added roughly $400 million to the FDI estimation. The RBI’s report on FDI in ‘02-03 was reviewed recently at a meeting of finance and industry ministries and RBI. An interim report would soon be prepared by RBI on the ongoing process to capture more items in FDI calculation, said the officials.
So far, the work has been done only partially, concerning data that are already available or can be obtained without difficulty. There are many modes of foreign investment which are currently difficult to estimate for which methods of data collection have to be evolved, added the officials.
Data on reinvested earnings with regard to 3,000 major companies have been included in the FDI figures for ‘02-03. A process to collect the data from a total of over 10,000 companies are on, while this has not been accounted in the 02-03 figures. The areas that still need to be explored for FDI calculations are investment by MNCs for establishment of branch offices, and money flowing to a subsidiary from its parent corporation as grants.