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Economic survey predicts overseas capital inflow
By agencies
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Friday, 25 February 2005, 20:30 IST
NEW DELHI:India will witness strong flow of overseas capital as investors are buoyant on the impressive growth in Asia's fourth largest economy, the economic survey that was released today said.
The growing strength of India's external sector provides the enabling conditions to accelerate the pace of external liberalization, the economic survey said.
"Overall capital flows are expected to remain buoyant given the positive outlook on the Indian economy," said the survey.
"The large capital flows have resulted in further accumulation of reserves, rendering the reserve position comfortable as per various indicators of reserve adequacy," it added.
Indias foreign exchange reserve rose to a staggering $129.98 billion in the week ended Feb 11 on large-scale overseas fund inflows into the domestic market.
The survey also added that despite the uncertain international economic environment due to hardening of interest rates and volatility in crude oil prices, India's external sector was expected to remain a source of strength.
"The outlook for balance of payments appears reasonably strong and resilient, even after taking into account any acceleration in imports resulting from positive macroeconomic outlook and volatility in crude oil prices," it said.
"External sector is likely to benefit from the sustained momentum of manufacturing activity. Continued robust growth of exports of merchandise and services is likely to absorb additional imports."