Context: Prospects of India’s turnaround in foreign portfolio (FPI) inflows in FY21.
India’s turnaround in FPI inflows: FPI inflows reached $36.8 billion in 2021, only second to $42.2 billion in 2015.
Factors that drove FPI inflows
Significance of FPI inflows
Potential risk factors
Conclusion: Avoiding long-term scarring, preventing a collapse in consumption engine, and widening urban-rural chasm will be more effective as compared to $600 billion-plus forex reserves and a rich monetary policy toolkit when the next shock hits.