Green Policies Hurting FDI,Says RBI.

MUMBAI: The RBI has said that environment sensitive policies and procedural delays are hurting foreign direct investment.

The moderation in FDI inflows to India during April-November 2010 has been driven by sectors such as construction,mining and business services.A major reason for the decline in inward FDI is reported to have been the environment sensitive policies pursued,as manifested in the recent episodes in the mining sector,integrated township projects and construction of ports,which appear to have affected the investors sentiments,the RBI said The report adds that persistent procedural delays,land acquisition issues and availability of quality infrastructure have added to the environment related issues.These factors,which are more structural in nature,if addressed expeditiously,could raise the share of India in the projected FDI flows to EMEs in the near future,the RBI said.

The central bank said that while the subdued growth of services receipts is cyclical in nature and can be expected to resolve with the global recovery becoming more broad-based and robust,the rise in crude oil prices and reasons for moderation in FDI are more structural in nature.Since supply of crude oil is relatively inelastic,the economy needs to adjust itself in the medium-term by investing in the use of non-conventional sources of energy.As regards FDI flows,the reform process needs to be expedited to address the impediments,it said.

Source : timesofindia.indiatimes.com