Major Flows of Foreign Capital and Revenue Receipts in India

Abstract

Capital may be the most significant factor of production along with entrepreneur. There are two types of capital, human capital and physical capital. In the present paper, the focus will be on physical capital and particularly that brought from foreign countries. A business consisting of commerce, trade, aids to trade and industry is dependent upon capital. The present research study will focus on the flows of foreign capital in the era of globalisation in the whole world. It may facilitate different governments, multi-national companies, multilateral institutions, planners and decisionmakers to take various decisions of investments whether foreign direct or portfolio both. In any country, the business environment may be conducive to the growth of business and trade. The foreign capital will flow into a country where the business environment is comfortable and vice-versa. Such capital may be in the form of foreign aid, foreign direct investment, foreign portfolio investment, commercial loans and official flows. Generally foreign capital remains helpful in technology transfer, exploitation of natural resources, strengthening infrastructure, increasing productivity, generating employment opportunities along with increasing competitiveness in the domestic economy. However, many a times, there may be some restrictive conditions with foreign capital along with its sensitivity in the local business environment. In the present paper a global scenario regarding foreign capital will be analysed that may help individual countries in their policy formulation and also multilateral institutions to decide the global future course of action.