After a Setback, Financial Liberalization Continues

     Though government plans to allow foreign direct investment in retail have been put on indefinite hiatus, the first policy move of the new year was consistent with the theme of market liberalization. As of January 15th for the first time qualified foreign investors (QFIs) will be able to invest in local share markets. Indian stocks were previously only accessible to foreigners through mutual funds or institutional arrangements. The permitted the level of investment for an individual investor is limited to 5% of a company's total capital for individuals, with cumulative foreign investments representing up to 10%. This year was a terrible year for Indian stocks, and the government will have difficulty addressing the country's growing current account deficit.