RBI’s monetrary policy has sent a positive message: Nirmala Sitharaman

India’s inflation is at a manageable level and the Reserve Bank of India’s latest monetary policy which included a 50 basis points hike in interest rates, have sent a “very positive message in the market”, Finance Minister Nirmala Sitharaman said on Saturday. 

Over 70% of the foreign portfolio investors (FPIs) who had left the Indian stock markets in the months running up to July, have returned over the last two months, the Finance Minister said, asserting that India is now entering an era of robust economic activity. 

“…Till July, you had a lot of FPIs flowing outside of India, going away from India. And people thought, ‘Oh, that’s an indication the economy is going to be in distress’. As much or even more have started coming back from August and till September, more than 70% of all of whom went out, have equally come back,” she said.   

Noting that it is going to be a period ‘unlike any other times’ for the economy and businesses, with investments and manufacturing as well as services sectors, Ms. Sitharaman said a lot of funds will flow into India and several mergers and acquisitions can be expected. 

“This is going to be an era of entrepreneurship for building Indian economy, for a lot of flow of funds that is going to come into India. The government is actively engaged with sovereign funds, the big funders who can come and invest in India,” she said, pointing to the interest shown by global investors in schemes like production-linked incentives. 

“You are going to have a lot of mergers and acquisitions, I think. Mergers and acquisitions are also going to happen because it’s an economy which is seen as the sweet spot world over, because we have achieved a certain growth and are standing out as the fastest growing economy in the world. And therefore, you’re going to have a lot of investor interest,” she explained. 

Speaking at the sixth annual day of the Insolvency and Bankruptcy Board of India, Ms. Sitharaman said that the ‘era of robust economic activity’ would require regulators to be robust as well.   

“We need a lot of good professionals which are going to help the economy understand how liquidation, how insolvency, bankruptcy, all of them can be handled, where required, in a very efficient and timely manner,” she concluded.