Question

With reference to Foreign Direct Investment in India, which one of the following is considered its maior characteristic ?

a. It is the investment through capitol instruments essentially in a listed company.
b. It is largely non-debt creating capital flow.
c. It is the investment which involves debt-servicing.
d. It is the investment made by foreign institutional investors in the Government securities.

Answer 1

The major characteristic of Foreign Direct Investment (FDI) in India is that it is largely non-debt creating capital flow. The correct answer is option b.

Step-by-step explanation:

The correct answer to the question is option b. It is largely non-debt creating capital flow.

Foreign Direct Investment (FDI) refers to the investment made by a company or individual from one country into a business or project located in another country. One of the major characteristics of FDI is that it involves largely non-debt creating capital flow, meaning that it does not create a debt that the host country owes to the investing country.

For example, if a multinational corporation invests in setting up a manufacturing plant in India, it would be considered as FDI. The investment made by the multinational corporation is in the form of equity capital and does not create a debt that needs to be repaid by the Indian government.