India’s overseas investment portfolio grew by a whopping $7.6 billion in August as investors remained upbeat about the country’s growth and inflation outlook, even during the phase of major global meltdown.
Moreover, China’s bleak economic prospects amid the continued construction sector meltdown have forced many investors to consider India an investment destination.
According to the State Bank of India chief economic adviser, Soumya Kanti Gosh, “India is benefiting tremendously from the TINA factor. While most global economies are being pressured down by high inflation and increasing interest rate, India’s positive economic growth has attracted many overseas investors who are riding on the country’s positive growth and inflation outlook in FY23.”
Investment inflows into the country suggest a reversal in trends established since Russia invaded Ukraine. The Bank of Baroda’s Chief economist, speaking on the bubbling economic growth in the country, stated that investors are beginning to see India for what it is- the best-performing economy, and this doesn’t come as a surprise, especially when investors look carefully at the IMF growth projections for India.
To add to that, all economic parameters, except export which has taken a hit in recent months, suggest that India’s economy performed superbly in the first four months of the year.
The IMF and India’s growth projection
The Indian economy has continued to surprise analysts, especially amid the rising oil prices and the war in Ukraine. The International Monetary Fund reviewed the country’s growth projections to about 7.4%, which is significantly higher than economic projections for many developed economies. Also, the IMF growth projection for India is a tad higher than the Reserve Bank of India’s projection, which estimates the Indian economy to grow by 7.2%.
While India’s economy remains on course to outperform previous years, experts’ predictions show that investment outflows totaling $14.7 billion in the first few months of this year have continued to weigh on the rupee.
Similarly, the country’s foreign exchange has depleted by over $42 billion since April, with India’s current foreign reserves reported to be around $564 billion as of August this year.