Capital flows gaining momentum in a recovering economy: RBI

Reflecting better growth prospects and investor confidence,capital flows into the country gained momentum in the current fiscal,the RBI said.

Reflecting better growth prospects and investor confidence,capital flows into the country gained momentum in the current fiscal,primarily to manufacturing and communication services sectors,the RBI said on Thursday.

During the first half of the year,net capital inflows were higher mainly driven by foreign investment inflows,reflecting the turnaround in FII inflows,the RBI said in Macroeconomic report on Thursday.

FDI inflows were mainly channeled into the manufacturing sector,followed by communication services and real estate sectors,the central bank said ahead of the policy review on Friday.

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“The latest available information on certain indicators of the capital account indicates that the revival in capital flows…have remained buoyant even in the third quarter,” RBI said.

A better than expected macroeconomic performance and positive sentiment of global investors about India’s growth prospects helped improve the capital flows,RBI said.

Inflows under portfolio investment were led by large purchases of equities by FIIs in the Indian stock market and revival in net inflows under ADRs and GDRs,the RBI said.

Banks have reported higher net inflows under NRI deposits,the report said. However,flows under External Commercial Borrowings,during the period,remained lower,RBI said.

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