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28 October 2024

Why Was FDI Growth Abysmally Low In India, Despite Attaining Higher Growth In The Economy? – Analysis

Subrata Majumder

An introspection of Foreign Direct Investment (FDI) flow in India reveals that FDI fell on the lowest ebb in 2023-24 within 5 years. This is despite the fact that country achieved one of the highest growth in the economy. It dropped to US$ 44,423 million in 2023-24, from US $ 59,636 million in 2020-21. This is in contrast to a spur in GDP growth, viz, 9.4 percent in 2021-22, 6.7 percent in 2022-23 and 7.2 percent in 2023-24.

The anomaly between FDI growth and GDP has raised eyebrows. This highlighted that developing nations like India, who are dependent on FDI for economic development, became vulnerable to global investment flows.

India is under utter disappointment and despair, as to why FDI did not align with the growth in the economy, despite being wooed by factors, like rising resilience to the global oil shock after shifting to Russian oil, overcoming the COVID 19 epidemic and enlarging the domestic market due to spur in GDP growth and demographic advantages.

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