"net selling by FIIs amounted to just about $12 billion worth of Indian equities, or some 7% of their total holding, in the BSE-500 between January and September, the 57% drop in the BSE-500 index and more than 20% loss in the exchange value of the local currency saw their portfolio shrink by more than 75% on a mark-to-market basis.
FIIs had pumped about $67 billion net into Indian equities between 1993 and 2007."
How India's Foreign Reserves Are Different
Significant parts of India's foreign exchange reserves were built by investments made by foreign institutional investments - which for long, considered as 'unsafe' and 'hot' money. However, investors were so enamored with Indian entrepreneurs and the transparency in electronic trading that SEBI and RBI had to put brakes on inflows - so that Indian economy does not catch the Dutch disease. A major attraction were Indian electronic stock exchanges, which are cutting edge players in transaction processing.
The arrogance of FDI
FDI on the other hand pawns the economy in the hands of foreigners - and local citizens become poorly paid employees of foreign 'masters'. This also damps down the local industry. China has focused for long on FDI - and jobs for its rural poor. Most MNCs finally follow a scorched earth policy - and leave domestic competitors devastated.
In 1977, when Coke, IBM etc were asked to issue shares to Indian citizens, these MNCs arrogantly, chose to leave India instead. With FIIs such arrogance is absent.
Announcement
The 2ndlook model for a Third currency Bloc is ready. Join in to review, participate, critique and develop the First Cut. While the need for a new global reserve currency has been evident, there is very little in the public sphere. The speed of events has clearly caught the BRICS and Third World napping - and unprepared. But, not 2ndlook - who, from the very beginning, proposed that the world should stop clinging to the Dollar-Euro skirts.
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