The finance minister's budget announcement on Friday to allow foreign investors to invest in corporate bond market would increase the foreign money in the Indian economy.
"The India growth story for FII has to look attractive from time to time and the announcement to allow qualified foreign investors to invest in corporate bond market is one such move," said Sandeep Sikka, chief executive officer, Reliance Capital. "While in the long run the FII inflow would depend on the relative opportunities in other economies and steps taken by the government."
Also the finance minister stressed on deepening the reforms in the capital market by allowing two-way free flows in Indian depository receipts (IDR). "Permitting two-way fungibility in IDRs subject to a ceiling with the objective of encouraging greater foreign participation in Indian capital market," the FM said. The FII inflows in 2011 had been weak but they have picked up in January and February.