July 20, 2014 5:59 PM

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Govt enhances FDI cap in Defense, Insurance sector to 49%

To make the economy more robust and free from the resource crunch, the government this time did not disappoint the market and gave a major push to Foreign Direct Investment, FDI in the Budget.The Finance Minister announced a substantial increase in the FDI cap in defense and insurance sectors from 26 per-cent to 49 per cent.To overcome the financial constrain the government has given a major push for FDI in the Budget. Kumar Bijoy, an economist has endorsed FDI proposal and said that the country needs more capital resource from outside to fund infrastructure projects to recover the economy.Echoing the same tune, Rupa Nitsure ,Chief Economist of Bank of Baroda said that the Budget liberalized FDI in a great measure.No doubt, the FDI has a major role to play in India's growth story, but it is not a magic wand which will embrace the growth in India alone.India is estimated to require about one trillion dollars in FDI in the next five years to over haul infrastructure sector including ports, airports and highways to boost growth. In 2013 India has received 28 Billion dollars FDI, which ranked 16th among the top 20 global economies.Though in this budget, the government might have taken some effective measures to revive the economy, particularly to get foreigner money but how far it will reflect on the ground is a big question.

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