NEW DELHI: The falling trend in foreign portfolio investments (FPI) in India may not have any major macroeconomic impact as long as capital flows are adequate to finance the current account deficit, parliament was told on Tuesday.
"As long as other capital flows remain adequate to finance CAD (current account deficit), decline in the level of FPI flows may not have a significant impact on the macroeconomic outcome," Minister of State for Finance Jayant Sinha told the Rajya Sabha in a written reply.
During April-November period of the current fiscal, FPIs had withdrawn Rs.7,008 crore from India's capital markets.
Earlier, FPIs had made a net investment of Rs 2.77 lakh crore and Rs.51,649 crore in 2014-15 and 2013-14 respectively.
Sinha said FPIs help supplement domestic resources and the growth momentum. Besides, they help finance the level of current CAD and have implications for the exchange rate.
However, big FPI flows tend to impact exchange rate and require to be modulated by the Reserve Bank of India through intervention, he said.