RBI mulling panel to study slowdown in FDI

Mumbai: The Reserve Bank of India (RBI) is considering setting-up a panel to study the slowdown in foreign direct investment (FDI) in the country, a top RBI official said.

"The RBI is likely to set up a panel to study the issue and will come out with a report," Reserve Bank of India (RBI) Deputy Governor, K C Chakrabarty, told reporters on the sidelines of an event here on Friday.

He, however, said that "there is no concern over FDI slowing down."

The report is to understand why FDI is slowing down and what should be done about it, he said.

"If we know why it is slowing down then may be we will get some clue. If a research paper is available then the concerned people may take some corrective measures," Chakrabarty said.

The panel will be an internal RBI one, he said.

RBI Governor, D Subbarao, had earlier said that plans are in the works to form a panel to study the slowdown in foreign direct investment.

Subbarao said that the panel would suggest ways to encourage FDI.

India received less foreign direct investment in 2010 than the previous year, courtesy a modest recovery in the global economy which reduced the risk and expansion appetite of corporates across the world.

During the April-November 2010 period, FDI fell to USD 19-billion year-on-year, from over USD 25-billion in the corresponding period of the previous year.

Chakrabarty said that inflation created a difficult situation but was "still manageable and required a balancing act."

"We must understand that ultimately if inflation is not controlled, we can`t sustain high growth," Chakrabarty said.

Food inflation eased in late January to just over 13 per cent after having reached a one-year high of more than 18 per cent on December 25, due to soaring prices of onions and potatoes.