Facts for Prelims (FFP)
Source: BS
Context: The recent decline in gross foreign direct investment (FDI) is concerning, but equally worrying is the increasing pace of repatriation and disinvestment.
What is repatriation and disinvestment?
Repatriation refers to the process of sending profits, dividends, or funds earned from investments in a foreign country back to the investor’s home country.
Disinvestment, on the other hand, involves reducing or liquidating investments in a particular asset or sector, typically by selling off shares or assets owned by a government, company, or individual.
Concerns: Repatriation and disinvestment are concerning because they indicate a withdrawal of capital from India, potentially undermining the positive impact of foreign direct investment (FDI) inflows.
Data:
- 46 FDI proposals were pending with 17 government departments for over 12 weeks
- Gross FDI inflows fell by 16% to $71 billion in 2022-23, with repatriation and disinvestment accounting for 41% of it.
This trend, rising steadily since 2001-02, negates FDI’s positive impact, necessitating institutional oversight revival, investigation into causes of repatriation, and simplification of procedures to retain and attract foreign investors.
