FDI data cannot be taken on face value; RBI needs to regenerate it to provide realistic picture: Experts
The data limitations on FDI inflows include delayed reporting, duplicate reporting, incorrect entries, notional inflows, inappropriate industrial etc
New Delhi: Pointing out discrepancies in FDI data, a study by two renowned experts has suggested that the RBI should regenerate foreign fund inflows and outflows data with detailed information at least for the past five years with a view to providing a more realistic picture of overseas investments.
Foreign direct investment (FDI) inflows database cannot be taken on its face value due to various shortcomings, the study outlined.
"While the annual aggregates do not provide adequate guidance regarding year-to-year changes, the sectoral reporting has some serious limitations ... Besides these weaknesses in reporting, FDI in India must also be read in light of disinvestments and repatriation of capital, which are adversely impacting on the gross inflows to a significant and growing extent," it added.
The report was prepared by KS Chalapati Rao, Professor (Retd), Institute for Studies in Industrial Development (ISID), and Biswajit Dhar, Professor, Jawaharlal Nehru University.
The data limitations on FDI inflows include "delayed reporting, duplicate reporting, incorrect entries, notional inflows, inappropriate industrial classification, and round-tripping by large global corporations".
It said that FDI data reporting has to be improved drastically in order to properly understand the contribution of the overseas investments.
The study also suggested that along with a review of the FDI policy, the reporting mechanism should be reviewed to make the data on inflows facilitate drawing of "meaningful inferences and to provide guidance to policymakers and other national and international analysts".
"The RBI should regenerate the inflows/outflows data with enhanced information content, at least for the past five years. Further reporting of inflows could follow in that pattern," it added.
FDI was $44.85 billion in 2017-18 as compared to $43.47 billion in the previous fiscal, showing a growth rate of 3 per cent -- the lowest in past five years. FDI inflows were worth $40 billion in 2015-16.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to historic low.
Jagdishan, a chartered accountant by profession, is a science graduate and has a Master's degree in Economics of Money, Banking and Finance. He has over 29 years of experience in the banking industry