IMPACT OF FDI ON INDIAN ECONOMY

The liberalisation policies of Indian economy implemented in the Nineties has paved way for inflow of Foreign Direct Investment (FDI) in the Indian economy.  The FDI has since then has been playing an important role in the development of the country such that the economic development has been stimulated in India during the past two decades. The FDI may be received either through automatic route or government route in India.  FDI has helped India by enabling transfer of financial resources, technology and innovationin addition to facilitation of improved management techniques in order to raise productivity. FDI is a very essential constituent of development strategy for both, developed and developing countries. With the effective initiation of globalization, developing countries, particularly in Asia, have been immense surge of FDI inflows over the last two decades.  The aim of this paper is to study the impact of FDI on Indian economy.  The researcher has made an attempt to establish relationship between FDI and selected economic indicators of development for a ten year period from 2008-09 to 2017-18and also analyze the impact of FDI on selected economic indicators in Indian domestic market for the study period. The economic indicators selected for the study are Whole Sale Price Index (WPI), Exchange Rate (ER), Exports (E), Imports (I), Foreign Exchange Serves (FER), Gold Price (GP)& Silver Price (SP).  The study is analytical in nature and is based on secondary sources. Statistical tools like Correlation analysis and regression analysis have been used in the analysis and interpretation of data. It was found that there exists positive relationship between FDI and all the economic indicators except the WPI where it was negatively correlated with FDI. Of the selected indicators that are positively correlated with FDI, FER & FDI has the highest  positive correlation with a value of 0.46 and the correlation coefficient between FDI & Silver price is the least at 0.14.  The study concluded that the FDI flow has an impact on the Indian economy.