Foreign investments and their macro effects
Economic policies should focus hard upon exports even as liberalizing inward-outward investments remains a policy objective
External direct financing isn’t proving all that beneficial, as Indian policymakers now realize. Not on par with exports at least. What were pure FDI (foreign direct investment) receipts in the first period have strings attached in subsequent periods as associated outflows mount and perversely pressurize both the fiscal and current account deficits. This exposes a narrow policy focus in liberalizing the financial side of the balance of payments without sufficient attention to countervailing repayments support from exports and other investment incomes. Ironically, the desperation for foreign capital is forcing policies even more in this direction.