Even at $100 bn, FDI may not be sufficient to finance ballooning CAD

CAD is expected to hit a decadal high of 3.8% of GDP, or $130.5 bn; to make matters worse, FDI inflows expected are on gross basis and net inflows would be much lower than $100 bn

The government is confident that the country is on track to attract foreign direct investment (FDI) of $100 billion in the current financial year. If that happens, the country will get some relief amid uncertain foreign portfolio investments (FPI) flows in financing its burgeoning current account deficit (CAD), which is expected to be at a decadal high of about 3.8 per cent of gross domestic product (GDP) this fiscal.

However, this along with other external investments flow, is not likely to be sufficient to fully finance CAD.

A CAD as high as 3.8 per cent of GDP means $130.5