What is foreign capital?

Foreign capital is money entering the country in the form of concessional assistance or non concessional flows.There are many Forms of Foreign Capital Flowing into India such as banking and NRI deposits. The various Forms of Foreign Capital Flowing into India has helped to bring in huge amounts of FDI into the country, which in its turn has given a major boost to the Indian economy. Foreign Direct Investment in India: The government of India made several changes in the economic policy of the country in the early 1990s. This led to the deregulation and liberalization of the Indian economy and also increased the flow of foreign direct investment into the country. The total amount of foreign direct investment in India stood at US$ 42.3 billion in 2001, in 2002 this figure came to US$ 54.1 billion, in 2003 this figure stood at US$ 75.4 billion, and in 2004 this figure increased to US$ 113 billion. This shows that the total amount of foreign direct investment in India has increased at a very rapid pace over the last few years. Various Forms of Foreign Capital Flowing into India: The Forms of Foreign Capital Flowing into India include, NRI deposits, which are made in profitable foreign currency accounts. The total amount of Foreign Capital Flowing into India in the form of NRI deposits came to US$ 2.32 billion in 2000- 2001, in 2001- 2002 this figure stood at US$ 2.75 billion, and in 2002- 2003 this figure increased to US$ 2.98 billion.

Further the various Forms of Foreign Capital Flowing into India are portfolio flow of capital that are made by institutional foreign investors that make investments in India's debt and stock markets. The total amount of Foreign Capital Flowing into India in the form of investments being made by foreign investors in the country's stock markets came to US$ 2.8 billion in 20002001, in 2001- 2002 this figure stood at US$ 2 billion, and in 2002- 2003 this figure came to US$ 979 million. The Forms of Foreign Capital Flowing into India also include, investments that are being made by the foreign investors in the commercial banks of India. The total amount of Foreign Capital Flowing into India in the form of investments in the commercial banks by foreign investors came to US$ 2.63 billion in 2001- 2002 and the next year, this figure increased to US$ 5.15 billion. Indian government must boost Foreign Direct Investment: The government of India must make polices that will help bringing in huge amounts of foreign direct investment into the country, for this will lead to the growth of the Indian economy. Forms of Foreign capital: 1. 2. 3. 4. 5. Direct Foreign investment Foreign collaboration Inter-Government loans Loans from International institutions External Commercial Borrowing(ECB)