Foreign funding: Higher FDI to improve growth outcomes for Indian economy

India needs to continuously improve its business environment to attract durable foreign saving

India needs sustained higher investment to grow at an increased rate for an extended period. Given its stage of development, India’s domestic savings are insufficient to finance its growth, requiring the import of capital from the rest of the world. Foreign capital flowing into India comes in various forms and with diverse objectives. For instance, some foreign portfolio investors (FPIs) may be coming just to take advantage of the interest-rate differential between India and their home country, say, the United States. Such investment may be of a short-term nature and reverse quickly. The most stable variety of foreign investment is