Why Efficiency of Capital, Not Its Volume, Matters More for India
· Business · Indian Express, LiveMint
The Reserve Bank of India has drawn $143.596 billion in foreign currency inflows under its special US dollar-rupee forex swap facility introduced in June, with FCNR(B) deposits accounting for the overwhelming share. The facility aimed at attracting fresh foreign currency inflows into the banking system. Foreign Direct Investment, foreign borrowing, NRI deposits, and RBI reserves each create different future claims and are not equivalent in productive value. The critical question is whether foreign capital creates enough productive capacity to meet the claims it leaves behind, rather than simply how much capital enters India. Infrastructure, semiconductor plants, clean energy, and digital networks require large, long-term foreign investment, but every inflow must be weighed against future repayment obligations.
Why it matters
Indian consumers, businesses, and investors are directly affected by how foreign capital translates into productive capacity such as infrastructure, semiconductor plants, and clean energy projects, since every inflow creates future repayment and repatriation claims.
Read the original report — Indian Express
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