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Foreign investment rises 13 percent to record level

Foreign investment rises 13 per cent 

Foreign investment rises 13 percent to record level

• Foreign direct equity investment (FDI) has grown at the fastest growth rate in 13 years to $ 49.8 billion during FY 2019-20. This information comes from the data released today by the Department of Industry and Internal Trade Promotion (DPIIT).
• These figures have brought relief for policymakers in India, who were concerned about the sluggish growth in equity investment. It had come down to 1 per cent in FY 2018-19 and had increased by only 3 per cent a year earlier.
• Including equity capital reinvested earnings and other capital, total FDI stood at $ 73.4 billion, up from $ 63 billion a year earlier. It has gained 18 per cent.
• Finance, banking, insurance, outsourcing and other services sector has the highest FDI of 7.8 billion. This was followed by a $ 7.6 billion investment in computer software and hardware manufacturing. There has been an investment of $ 4.5 billion in the telecommunications sector.
• During FY 2020, Singapore received the highest amount of FDI at $ 14.67 billion. Singapore has had the highest number of Nilesh for the second consecutive year. After this, an investment of $ 8.24 billion has come from Mauritius. Singapore has been a major source of foreign funds in India for a long time and since 2000, Karihab has invested $ 97.6 billion. Thus Singapore was the fifth-largest source of FDI during this period.
• However, in the last 2 years, there has been an increase in arrivals from Singapore and on a large scale, India's firms are joining the jurisdiction of this country. India has changed its treaty with Mauritius and Singapore, which came into force from FY 2020.
• FDI came from the Netherlands at $ 6.5 billion, $ 4.22 billion from the US, $ 3.7 billion from the Cayman Islands, $ 3.22 billion from Japan and $ 1.89 billion from France. Interestingly, many types of controversies have arisen over the investment coming from China, where only $ 160 million investment has come.
• Maharashtra remains the most sensitive state of foreign investors, with an investment of $ 7.2 billion. This is followed by investments of $ 4.2 billion in Karnataka and $ 3.9 billion in Delhi.

Fitch warns banks about lending, NPA to increase by 6% in two years

Fitch warns banks about lending, NPA to increase by 6% in two years

• Fitch Ratings warned in a report on Thursday (May 28) that lending already approved under the government's stimulus package of around Rs 20 lakh, crore could pose significant challenges in recovering debt instalments. The report said that this could increase their outstanding debt the ratio by six per cent during the next two years.
• Fitch Ratings said that due to the pressure of forced lending, the outstanding debt ratio of banks can be between two per cent and six per cent. This will depend on the severity of the banks' situation and the risk appetite of the banks and high regulatory provisions. The agency, however, did not provide separate information about the NPAs of public sector banks and private sector banks.
• The stimulus package announced by the government includes several types of relief in bank loans and a 90-day increase in deferment in loan repayment. The Fitch report said these measures would place a heavy burden, especially on public sector banks, whose balance sheets are already very weak.
• According to the report, both consumer demand and manufacturing are likely to remain in poor condition until the growing cases of coronavirus infection are contained. Fitch said tensions are rising in all sectors, but MSMEs and retail will be the most vulnerable.
• At the same time, Fitch Ratings has forecast a five per cent decline in the Indian economy in the current financial year (2020-21). Fitch said a strict lockdown policy has been implemented in the country because of the coronavirus.
• This led to a drastic decline in economic activity, which would have a direct impact on the growth rate of gross domestic product (GDP). Earlier in April, Fitch had estimated that India's GDP growth rate would be 0.8 per cent in the current financial year. Now Fitch has reduced his estimate significantly.

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