The foreign investment related survey conducted by the United Nations in various countries should set alarm bells ringing amongst our policy makers, as it not only confirms the decline in Foreign Direct Investment (FDI) in India but also highlights perennial problems which are yet to be addressed. According to the UN survey, when compared to 2009 there has been a steep decline of USD 10 billion FDI in the country in 2010. Subsequently, India has dropped to the 14th rank in the list of countries attracting maximum FDI. In 2009, India stood tall at 8th position drawing a FDI to the tune of USD 36 billion. Albeit, it will be difficult to figure out whether our policy makers accede with the view of financial experts who have analysed the issue of decline in Foreign Direct Investment as a matter of grave concern, but they should definitely empathise the need for creating a healthy environment to give a fillip to investments. Any alibi in this context is highly unacceptable because at the global stage there has been a five percent increase in foreign investment and even a country like Bangladesh has witnessed a 30 percent increase in foreign investment. India cannot condone the fact that last year more than half of the foreign investment was made in developing nations. Therefore, it is pertinent to explore the root cause which has led to the downfall of foreign investment. As the Indian government is well versed with these issues, there is no other way out than finding a solution to the prevailing problems.

It is not surprising that scams and corruptions are the two major reasons cited by the United Nations behind the decline in Foreign Direct Investment in India. The soaring number of cases of corruption is playing on the minds of foreign investors. The negative situation caused by the failure of government mechanism cannot be ameliorated by making superficial statements to showcase it’s resoluteness to promote foreign investment. These tall claims are nothing but a damp squib as the financial experts are compelled to arrive at a conclusion that neither the Indian government has developed an effective mechanism to counter corruption, nor it has undertaken any serious measure to speed up the pending economic reforms. It is highly disappointing that at a time when all and sundry have backed the urgent need for the second phase of economic reforms, the Union Government is busy making hollow assurances on the issue. The issue is not only related to delay in the amendment of the Land Acquisition Act to boost the industrial sector, but also includes several pending projects which are hampering the country’s growth. On one hand there appears to be no fresh ray of hope for the energy sector, on the other, infrastructural developments too have come to a standstill. Similarly, projects related to labour reforms, pension reforms also hang in a balance.  Under such circumstances, it becomes extremely important for the Union Government to adopt a serious approach towards the United Nations survey.