Euro crisis may trigger more capital flows into India: RBI
India is likely to witness a surge in capital inflows as investors may find the country an attractive bet in the backdrop of an uncertain global environment, a top Reserve Bank official said on Saturday.business Updated: Jun 12, 2010 16:03 IST
India is likely to witness a surge in capital inflows as investors may find the country an attractive bet in the backdrop of an uncertain global environment, a top Reserve Bank official said on Saturday.
"Money tries to come to places where it gets better returns. So from the point of view of capital flows, you do have the likelihood of more uncertainty in the rest of the world and therefore more money coming to India," RBI Deputy Governor Usha Thorat told reporters in Mumbai.
Foreign Institutional Investors have, so far, invested around $5 billion in the domestic share market against a total investment of $17.45 billion in 2009.
Policymakers, worldwide, are watching the developments associated with the euro zone crisis, which broke out after Greece nearly defaulted on public debts.
To avert the deepening crisis, euro zone countries and the International Monetary Fund formed a $one trillion rescue package to bail-out Greece.
The Reserve Bank, which has started withdrawing emergency monetary stimulus measures of the crisis period, is in a dilemma about hiking policy rates next month to facilitate the exit while the recovery is still nascent.