Foreign institutional investments: A catalyst to foreign exchange reserves-an Indian perspective analysis

After the economic reforms, India welcomed the foreign investments with certain restrictions and regulations. Emerging countries like India, hardly suffering from capital insufficiency to develop their infrastructure and to fund the projects. Foreign investments especially foreign direct investment and foreign institutional investments financially and technically aiding India. Foreign institutional investors are pretty different from the other foreign investments as they are highly volatile in nature and most diversified means of equity investments. They bring their capital in their domestic currency and let the hosting country to reserves foreign currency reserves to attempt its short-term obligations like payments for imports and short-term debt and loans across the globe. This paper made an attempt to calculate the strength of the relationship of FII with Indian foreign exchange reserves.