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Dollar inflow to defy slowdown

New Delhi, April 24: Foreign direct investment into India is likely to surge to $30 billion in 2009-10, at a time when overseas companies are hit by the global recession.

“The overall outlook (for 2009-10) remains positive. Our share of world FDI inflow continues to grow,” Gopal Krishna, joint secretary in the department of industrial policy and promotion, told reporters at an industry event.

India is estimated to have received FDI worth $27.5 billion in 2008-09, up from $24.57 billion in the previous year. However, inflows in March 2009 fell to $2.5 billion from $4.44 billion in the same month last year.

Though the cumulative increase for 2008-09 is small, it is considered a positive development given the severe recession. “There will be some investment (in 2009-10) which will be delayed but overall outlook is positive and optimistic,” he said.

Analysts said this was a positive signal for the Indian economy as global investors were returning with a long-term perspective.

“It is an indication that the long-term policy outlook on the Indian economy is very positive. The FIIs had taken out the money with a short-term outlook. Growth in FDI is due to the strong fundamentals of the economy and the stimulus measures taken by the country to boost the economy,” N.R. Bhanumurthy of the Institute of Economic Growth said.

Analysts said the country would be attracting more FDI in the current fiscal as the government allowed more room to overseas firms to raise their stake in their Indian joint ventures.

Gopal Krishna, however, said the finance ministry had raised questions on the new foreign direct investment rules.

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