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104 Economic Survey 2021-22

to be the top investing country in terms of FDI equity inflow while USA occupies the second
position. The list of top five FDI sectors and investing countries is given in Annexure IV.

3.44 The latest aggregate data on FPI is available till December 2021. As depicted in Figure
16, FPI flows remained volatile due to global uncertainties relating to US monetary policy
normalisation, rising global energy prices, fear of new variants of COVID-19 and strong
inflationary pressures. While the debt market witnessed net purchases during April-December,
2021, valuation concerns and profit booking by portfolio investors led to outflows from the
Indian equity market, leading to net FPI outflow of 0.6 billion, vis-à-vis net FPI inflow of US$
28.5 billion in corresponding period a year earlier.

Figure 16: Foreign Portfolio Investment remained volatile

Debt Equity Total FPI
30
21.1

20

US$ Billion 10 5.9 0.5 5.9 0.5 7.0 7.6 0.3 5.0

0

-10 -5.9

-20 -14.5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2019-20 2020-21 2021-22 (P)
Source: National Securities Depository Limited (NSDL).
Note: (i) Total net FPI is summation of debt, equity, hybrid and voluntary retention route (VRR), however, only
debt and equity are depicted in above chart as they together account for more than 90 per cents of the total net FPI.
Balance is hybrid and VRR.
(ii) P: Provisional
3.45 Among other forms of capital flows, banking capital recorded net inflow of US$ 4.4 billion
in H1: FY 22 as compared with a net outflow of US$ 9.0 billion in corresponding period a year
earlier, notwithstanding lower net inflows under Non-Resident Indian (NRI) deposit accounts.
With fresh disbursals exceeding repayments, net disbursement of ECBs (i.e., adjusted for inter-
corporate borrowing) was at US$ 4.7 billion in H1: FY 22.

BOP BALANCE AND FOREIGN EXCHANGE RESERVES

3.46 As elaborated earlier, India’s current account balance switched into a deficit in H1: FY 22
on the back of widening of trade deficit, reflecting amongst other reasons, a broad-based revival
of aggregate demand. However, this current account deficit (CAD) was adequately cushioned
by robust capital flows, resulting into an overall balance of payments (BoP) surplus of US$ 63.1
billion in H1: FY 22. This led to an augmented foreign exchange reserves crossing the milestone
of US$ 600 billion and touching US$ 635.4 billion as at end-September 2021.