The news on alarming fall in net fdi figures for 2024-2025 by almost 96% is serious by all counts. The gross fdi inflows have stagnated since demonetization at around 70-80 billion dollars annually but the net fdi or retention has been constantly falling and now is almost zero. Investors are pulling back their profits and even investments and worse is the growing trend of domestic investors preferring to invest outside.
This seems to be in line with the stagnant private investment rate in the country over the last 10 years and has been falling as a percentage of gdp.
This is reflective of the structural anomalies in our economy. Most importantly the growing inequality which has limited the purchasing power of the masses including the middle class. Second is the jobless growth which has compounded the problem. But above all is the growing uncertainty of our polity and markets. This uncertainty is the product of the weakening of our institutions, from the tax authorities to judiciary and from regulatory agencies to data. The growing social unrest, hate and bigotry has also contributed to low confidence among international and domestic investors.
The image of a plutocracy taking over repels genuine business both domestic and international With exports also stagnant for the last decade we may even have to face serious foreign exchange crisis
The dictum being.
Good ethics is good politics and good politics is good economics
Signs of deep issues in economy
