Survey debunks fears of FII hot money

The Economic Survey indicated that overall foreign investment in the country is likely to be on an upswing on the back of robust foreign institutional investors (FII) inflows. The survey also reflected government’s confidence in the regulation of the market and plays down the risk of FII flows suddenly changing direction.

In keeping with the trend in the last two years FII inflows continued to post robust growth shooting up nine times between July-September 2005 at $3.8 billion.

While the Survey does not rule out concommitant withdrawal by FIIs in response to adverse market sentiments, it pointed that strong fundamentals and widespread participation in longer-term investments like pension funds, life insurance companies and mutual funds reduce the chances of such a possibility.