The Indian government’s latest Economic Survey, released in New Delhi this week, has issued a stark warning regarding the tightening of global liquidity, specifically citing a noticeable decline in Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) inflows. As global interest rates remain elevated and geopolitical tensions escalate, the report highlights the growing pressure on the Indian Rupee’s stability, signaling a potential shift in the nation’s macroeconomic landscape for the upcoming fiscal year.
Contextualizing the Global Liquidity Crunch
For years, India has relied on robust capital inflows to fund its infrastructure projects and sustain its current account deficit. The current trend marks a departure from post-pandemic recovery highs, driven largely by the
