The year 2009 witnessed foreign institutional investors (FIIs) streaming in to bet on the India growth story, bringing in over US$ 17.46 billion in domestic equities as per Securities and Exchange Board of India (SEBI) data as of December 31, 2009. This is the highest ever inflow in the country in rupee terms in a single year, breaking the previous high of US$ 15.9 billion parked by foreign fund houses in domestic equities in 2007. The Bombay Stock Exchange's benchmark Sensex, comprising 30 bluechip stocks, gained more than 70 per cent during the year 2009, becoming one of the best performers among leading global bourses.

The 'OECD Investment Policy Reviews: India 2009' report hails India as both a major destination for foreign direct investment (FDI), and a major source of FDI. The report adds that India has become a major global player with high economic growth rates and its performance in the past year has been particularly impressive in view of the global collapse in FDI flows.

As per a Press Information Bureau press release dated December 24, 2009, India’s share of world FDI has jumped from 0.78 per cent in 2005 to 2.45 per cent in 2008, according to Mr Anand Sharma, Union Minister of Commerce and Industry. He quoted the World Investment Report 2009 which named India as one of the top five most attractive locations for FDI for 2009-11. The 2009 survey of the Japan Bank for International Cooperation, conducted among Japanese investors, ranks India as the second most promising country for overseas business operations.

India's foreign exchange reserves stood at US$ 278.7 billion as on Feb. 5, 2010 according to the Reserve Bank of India (RBI) in its weekly statistical supplement.

The country’s gold reserve also went up with the RBI purchasing 200 metric tonnes of gold for US$ 6.7 billion, in November 2009. This amount of gold represented about 6.1 per cent of the nation’s total reserves at the time. RBI's gold holdings increased to 557.7 metric tonnes with the purchase. As on Feb. 5, 2010, the country’s gold reserves were valued at US$ 18.06 billion, according to the RBI’s weekly statistical supplement.

Estimated Capital Inflows in 2009-10

Net capital inflows into India during 2009-10 fiscal are expected to be about US$ 50 billion, according to Dr C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council (PMEAC) who spoke on the sidelines of an OECD-India symposium co-hosted by the Organisation for Economic Cooperation and Development (OECD) and Indian Council of Research in International Economic Relations (ICRIER) on December 3, 2009.

According to a press release issued by the RBI dated December 31, 2009, gross capital inflows to India during April-September 2009, amounted to US$ 175.3 billion (US$ 184.4 billion in April-September 2008) as against an outflow of US$ 145.8 billion (US$ 172.5 billion in April-September 2008). Net capital flows at US$ 29.6 billion in April-September 2009 remained higher as compared with US$ 12.0 billion in April-September 2008.

FDI

FDI inflows for the period April-November 2009 stood at US$ 19.38 billion, according to Mr Anand Sharma, Union Minister of Commerce and Industry, as per a Press Information Bureau press release dated December 24, 2009. FDI inflows for November 2009 were US$ 1.74 billion, an increase of almost 60 per cent over the US$ 1.08 billion figure in November 2008. FDI equity inflows, as a percentage of GDP, have grown from 0.75 per cent in 2005-06, to nearly 2.49 per cent in 2008-09.

According to the second quarter Balance of Payment (BoP) data released by the RBI in a press release dated Dec 31, 2009, net FDI flows (net inward FDI minus net outward FDI) were higher at US$ 7.1 billion in the second quarter of 2009-10, as compared with US$ 4.9 billion in the second quarter of 2008-09. Net inward FDI remained buoyant at US$ 11.3 billion during Q2 of 2009-10 (US$ 8.8 billion in Q2 of 2008-09) reflecting relatively better growth prospects of the Indian economy. Net outward FDI amounted to US$ 4.2 billion in Q2 of 2009-10 (US$ 3.9 billion in Q2 of 2008-09).

FDI for the month of December 2009, grew to US$ 1.54 billion, an increase of 13.2 per cent over the December 2008 level of US$ 1.36 billion, according to the RBI bulletin.