Topic Details (Notes format)

FDI, FPI, and Capital Inflows

Subject: Economics

Book: Comprehensive Indian Economy

Foreign Direct Investment (FDI) involves ownership/control of domestic enterprises by foreign investors, fostering technology transfers and job creation. Foreign Portfolio Investment (FPI) pertains to passive holdings in stocks/bonds. Both shape India’s capital account and currency stability. Policy liberalization across sectors (retail, defense, insurance) aims to attract FDI, yet concerns over portfolio outflows remain. Monitoring “hot money” flows is essential to avoid volatility. For exam readiness, clarify FDI vs. FPI differences, sectors with automatic vs. government routes, and how capital inflows can buffer or destabilize the balance of payments depending on global sentiments.

Practice Questions

What is “inclusive growth”?

View Question

Which organization publishes the Human Development Index (HDI)?

View Question

Which term refers to the decrease in the value of a currency relative to foreign currencies?

View Question

What is the primary purpose of Special Economic Zones (SEZs)?

View Question

What is “currency devaluation”?

View Question

Which of the following is a feature of a command economy?

View Question

Which term refers to an economy that has elements of both capitalism and socialism?

View Question

What does the term “capital account” refer to in the balance of payments?

View Question

Which of the following is a direct tax?

View Question

What does “primary sector” of the economy include?

View Question