Survey predicts higher capital inflows this fiscal

With India recording a current account surplus of over $10 billion in 2001-02, the Economic Survey on Thursday predicted higher capital inflow in the current year on account of strong fundamentals of the economy.

While initial estimates have pegged capital surplus to be $4.9 billion during the first six months this fiscal, the Survey said "Indian economy, which has been one of the most resilient performers in developing Asia, is expected to receive much higher capital inflows on account of its strong fundamentals in the current year."

For the third time in seven years, capital account surplus was more than $10 billion in 2001-02, over two billion more than the previous fiscal.

Despite a net outflow of commercial borrowings of above $1 billion in 2001-02, the Survey attributed the capital account surplus to strong foreign investment and non-resident deposit inflows along with a step-up in net external assistance.

The surplus on capital account in first half of current fiscal has resulted in a surge in foreign exchange reserves encouraging government to liberalise capital controls.

While the East Asian crisis had resulted in a sharp reduction in volume of capital flows to the Asian markets, the Survey noted that private capital inflows in 2002 was expected to multiply by nearly two and half times their level in 2001 on account of the growth of inflows in the emerging markets of developing Asia.

PTI