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Finance Minister Nirmala Sitharaman on Thursday said that India’s inclusion in JP Morgan’s Government Bond Index-Emerging Markets (GBI-EM) is likely to bring $23 billion worth of forex flow in India.
She added that policy continuity and stable macroeconomic environment have facilitated the steady flow of foreign direct investment (FDI) in the country.
“It shows a prospect of $23 billion coming into India. That is the kind of impact that inclusion into the JP Morgan bond index means,” Sitharaman said while addressing an event to mark 96th and 97th Annual Day celebrations at the Shri Ram College of Commerce (SRCC) in Delhi.
India will be included in JP Morgan’s GBI-EM Global index suite from June 28 next year. India’s weightage is set to increase to a maximum of 10 per cent in the GBI-EM Global Diversified and 8.7 per cent in the GBI-EM Global index. Currently, 23 Indian government bonds (IGBs) with a combined notional value of $330 billion are index-eligible. GBI-EM GD accounts for $213 billion of the estimated $236 billion benchmarked to the GBI-EM family of indices. Only IGBs designated under the Fully Accessible Route are index-eligible.
FDI inflows
Talking about foreign capital flow, the Finance Minister said total FDI inflows in the last 23 years (April 2000-March 2023) were $919 billion. The total FDI inflows received in the last 9 years (April 2014- March 2023) were $595.25 billion which amounts to nearly 65 per cent of the total FDI inflow in the last 23 years. “This reflects policy continuity and macroeconomic stability because of which foreign investors are finding India an attractive destination,” she said.
She highlighted that government’s policy is based on ‘Nudge Theory’, given by economist Richard Thaler. This theory is being used as a tool to promote economic activity tailored to India‘s requirements. “Examples of its usage can be seen in the Beti Bachao, Beti Padhao scheme which has improved the sex ratio; to give subsidised loans to women under Stand-up India; and for nudging people to give up their LPG cylinder subsidy. PM SVANidhi Scheme was launched to give credit facilities to street vendors reducing their dependence on middlemen and the same has been applied in PM Vishwakarma Yojana,” she said.
The FM said the Prime Minister doesn’t believe in the principle of ‘Entitlement’. He strongly believes in ‘Empowering’ people, giving them the choice to do what they want, spending on fundamental things that give them the power to decide where they want to be, and providing them with access to resources and essential facilities like housing, roads, drinking water, toilets, etc.
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