Impact of Global Financial Crisis on FDI Flows in India – A Special Reference to Housing sector

Abstract

In India after agriculture, the real estate sector is the second largest industry and it is asserted to be the most promising sector even today. The real estate market in India mostly continues to remain unorganized, fairly fragmented, mostly characterized by small players with local presence. Indian real estate has huge potential demand in almost every sector especially commercial, residential, retail, and industrial, hospitality, healthcare etc. More emphasis was laid on FDIs in real estate only from 2005. Secondary data has been used for the study. The trends of the FDI's in real estate sector are compared with the other sectors in India. The FDI inflow data from 2002-2010 has been considered. This data is used to assess the impact of FDI's in India and economic growth achieved through FDI flows. This paper aims at analyzing the flow of FDIs in real estate sector in India and the impact of the global recession on the FDI flows along with the RBI initiations for attracting more FDIs into the real estate sector. It is observed that FDI inflows into several sectors into India are devoid of the declining GDP growth rate which includes the Housing sector also. The impact of recession is averted by the Government intervention, and certain efforts in Housing have in fact helped the economy grow and vice versa.