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> Policies> economic survey 2000-01
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Economic Survey 2000-2001
[Review of Developments]
Balance of Payments
Capital account
1.87 Capital flows improved significantly in 1999-2000. Net inflows of capital on the capital account of BOP increased by US $ 2.4 billion from an aggregate of US $ 7.9 billion in 1998-99 to US $ 10.3 billion in 1999-2000. This improvement was mainly due to a sharp recovery in portfolio investments and continued buoyancy in non-resident deposits. Fresh inflow of funds by the Foreign Institutional Investors (FIIs) increased to US $ 2135 million in 1999-2000 in contrast to an outflow of US $ 390 million in 1998-99. Net inflows of non-resident deposits in 1999-2000 was US $ 2140 million. Gross disbursement of external assistance rose moderately by US $ 3074 million in 1999-2000 compared to US $ 2726 million in 1998-99. Gross borrowing on commercial terms at US $ 3187 million in 1999-2000 was only marginally higher than such borrowings (excluding borrowings through Resurgent India Bonds) at US $ 2995 billion in 1998-99.
1.88 During the first half of 2000-01, net inflows of capital amounted to only US $ 2.5 billion compared with US $ 3.7 billion in April-September 1999. The fall in net capital inflows was due to net outflows on external assistance and external commercial borrowing accounts, although foreign investment and non-resident deposits performed well. The capital flows were augmented by the funds raised by the SBI from NRIs/OCBs through India Millennium Deposits (IMD) amounting to US $5.51 billion in October-November 2000.
Capital account reforms
Foreign Direct Investment (FDI) up to 100 per cent has been permitted in
e-commerce subject to specific conditions.
The dividend balancing condition for FDI in twenty-two consumer goods industries has been removed.
The existing upper limit of Rs.1500 crore for FDI in projects involving electricity generation, transmission and distribution (other than atomic reactor plants) has been dispensed with.
For facilitating greater inflow of foreign funds in the crucial oil-refining sector, ceiling for FDI under the automatic route in oil refining was increased to 100 per cent from the existing 49 per cent.
FDI under the automatic route has been permitted up to 100 per cent for all manufacturing activities in Special Economic zones (SEZs) except certain activities.
Foreign Institutional Investors (FIIs) have been permitted greater leverage in the primary and secondary markets by allowing enhancement of the aggregate FII investment ceiling in the issued and paid up capital of Indian companies from the normal ceiling of 24 per cent to 40 per cent subject to specific conditions.
Foreign equity participation up to 26 per cent in insurance sector is allowed under the automatic route subject to obtaining necessary license from the Insurance Regulatory and Development Authority.
ECB guidelines have been liberalised. A series of policy liberalisations have been effected for facilitating the use of ECB as a window for resource mobilisation.
Policies pertaining to international offerings through ADR/GDR by Indian companies have been further liberalised.
100 per cent FDI has also been allowed (with certain conditions) in telecommunications sector, for Internet service providers not providing gateways, infrastructure providers providing dark fibre, electronic mail and voice mail.
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