India, running tiger or grasping elephant: Mecklai

Mecklai graph of the day: Running Tiger or Grasping Elephant

As seen from the below graph the FII inflows have been the highest in the month of February this year so far and poured around USD 1195.62 million in the Indian economy. However, this reign discontinued and the hot money was withdrawn considerably reducing the foreign inflows. The foreign investors have been wary of the development in India causing the outflows.

Sluggish economic growth, untamed inflation and ever increasing current account deficit is the trilemma faced by India. Inspite of the government’s effort to address these issues through altering the policies and taking corrective measures, not much has translated into desired results. Also, in the wake of the political instability wherein a possibility of early elections is high, triggers the outflows. Of late, this has been a cause for FII outflows from the Indian shores for the fear of probable roll back of bold steps in the event of new party coming into the power. Against this backdrop, significant concern now arises as whether the economy would be back on a speedy growth and be a running Tiger or further slow down like a Grasping Elephant.

The below graph shows the movement of FII flows in the Indian debt and equity markets for past 2 months

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