TEWD OF NRI PORTPOLIO 1-S

Introduction

The previous chapter dealt with the NRI interest

in direct investment schemes. It highlighted the N R I

participation in the setting up of projects in India, direct

subscription to several schemes, their contribution to key

industrial sectors, etc. The analyses are also made in

respect of industry-wise and state-wise status of N R I

projects approval, investment, region-wise trend of N R I

investment in industries, etc. In this chapter an attempt

has been made to study the trend of N R I portfolio

investments adopting appropriate tools.

This chapter is also divided into two parts: 'Part

A ' and 'Part B'. While the former deals with N R I investment

in shares and debentures, the latter discusses the N R I

investment in company deposits, units of U T I , etc.

PART - A

Investment in Shares and Debentures

The Indian capital market provides a significant

opportunity to NRIs to invest their funds in corporate

securities. Portfolio investment, i.e., investment in

shares/debentures of companies through recognised stock

exchange, by NRIs is permitted only through designated

branches of authorised dealers. The rate at which portfolio

investment has also grown has resulted in the fact that the

quota of most new public issues reserved for NRIs has been

oversubscribed.

Portfolio analysis begins when a portfolio

investor has the expected Holding Period Return (HRP) and

risk statistics for the various bonds, stocks, and other

assets under consideration for inclusion in the portfolio.

A simple way to select assets worthy of investment is to use

the dominance principle. It states that among all

investments wit11 a givcn expect;ed 1IP11, the onc wit11 the

least risk is the most desirable, and conversely, among all

investments in a given risk class, the one with the highest

HPR is the most desirable.

Bepatriable Portfolio Investment

Table V.l is constructed mainly for the purpose of

analysing the portfolio investment made by NRIs. It is

Portfolio Investment by N l l l s (Actual Purchase of Shares and Debentures)

[ I ~ H , 111 < : l ' ~ l l ' ! ~ U )

Source (i) Jay Narayan Vyas, NRI Investment Policy and procedures, A Ready Reckoner, Saket Cnmmllni rntlon Crntrr, Ahrmnrlnhnrl, p. 2, nnrl

Year ending 31st March

1

19R2-83

1983-84

1984-R5

1985-86

19R(i-87

1987-88

1rWu-Rn

(ii) Compiled from the Annual Reports of the Indian Investment Centre, New Delhi.

Note: (i) Figures are cumulative

Repatriable

2

22 .!)I l00.1t~1)

40.43 (99.39)

46.57 [il!I.:ltl)

55.40 (98.70)

5R. OR (!It{, : I ! ) )

64.97 (97.73)

7n. o~ (!I / . 39)

(ii) t'lgures in parenltlescs are perccoLages Lo - total.

Non-repatri- able

3

0.01 lO.Il1~

0.25 (0.61)

0.30 (1l.Il-I)

0.73 (1.30)

0.95 ( 1 . I l l )

1.51 (2.27)

1.75 (2.41)

Total (2+3)

4

2 % . 9%

40.68

4f3.87

56.13

59.03

66.48

77.71

clear from the table that though there are facilities for

both repatriation and non-repatriation, NRIs prefer to

invest only in repatriable rather than non-repatriable

schemes. The portfolio investment on-repatriation basis was

nearly the centum at a percentage mark of 99.96 in the year

1983. It can be witnessed from the table that a sum of

Rs.22.91 crores is invested in the scheme during the year

1982-83 which accounts for 99.96 per cent of the total

portfolio investments. The corresponding figures for the

year 1988-89 is Rs. 70.99 crores recording 97.59 per cent.

Though there is a three-fold increase in terms of investment

for the period of seven years, the proportion between

repatriation and non-repatriation has been maintained at the

same level.

It is further seen from the table that the NRI

interest in the scheme has grown at a rate of 24.7 per cent

at the end of March, 1986, whereas, the same has grown at

6.39 per cent from 1986-89. Though the NRI interest has not

declined in the scheme, the overall growth rate shows a poor

growth of 17.53 per cent for the study period recording an

average flow of investment of Rs.51.33 crores per annum.

It can be seen from the table V.2 that the trend

equation fitted for the purpose shows that. the growth rate

for the scheme is encouraging ('b' value 7.3153). The

increasing trend of the scheme ('R~' value 0.9460) shows

that the growth rate is found statistically significant as

the computed 't' value is 9.36 at 5 per cent level of

significance. The reasons for th8 higher value of the

computed trend may be due to the liberalization policies of

the Central and State Governments on the rules, procedures

and other formalities in addition to the facilities of easy

transfer and taxation relief.

Non-Repatriation Portfolio Investment

It is seen from the analysis (vide table V.l) that

the share of portfolio investment on non-repatriation basis

is very meagre. In the initial period, this scheme accounts

for only 0.04 per cent of the total portfolio investments

and its share increased to 2.41 per cent during the year

1988-89. The NRI interest in the scheme in the initial

period shows a higher growth rate of 92.3 per cent, whereas,

for the later period, it has only 24.43 per cent growth.

However, the overall growth rate of the scheme for the

period shows that there is a sizeable growth (109.14 per

cent) recording an average investment flow of Rs. 0.7857

crores per annum.

The trend equation analysis (vide table V.2) shows

that the growth rate for the scheme is found statistically

significant as proved by the computed 't' value of 11.49

when the growth rate ('b' value) and consistency ('R2'

value) are worked out to 0.2996 and 0.9635 respectively.

The higher value of the computed trend may be due to the

liberalization policy of the GO1 towards the NRI investment

in the past half a decade.

Further, it is observed from the analysis (vide

table V.l) that the total portfolio investment (clubbing

both repatriable and non-repatriable schemes) is increasing

at a higher rate. The growth rate of the scheme shows that

there is a sizeable growth at 25.1 per cent for the period

upto 1986. But the growth rate for the schemes for the

remaining period, upto 1989, is only 6.7 per cent. However,

it is clear from the analysis that the growth rate of the

schemes for the overall period is 17.94 per cent recording

an average flow of investment of Rs.52.14 crores.

The trend equation fitted for the purpose also

shows (vide table V.2) that the growth of NRI investment in

these schemes is welcome as referred by the computed ' b '

value of 7.615. It is clear that the investment in these

schemes has positively increased, and the consistency ('R2

value 0.9516) and the growth rate ('t' value 9.91) is found

statistically significant at 5 per cent level.

The capital issues to NRIs by the Indian Joint

Stock Companies include the 'initial issues', 'further

issues', 'bonus issues', 'debenture issues', 'loans', etc.

The progress of capital issue of the Indian Joint Stock

companies to NRIs is shown in table V.3. It is evident from

the table that the capital issues to W I s by way of 'initial

issues' account for higher growth rate at 48.24 per cent.

The lower amount of growth is due to the 'debenture issue'

recording 3.42 per cent growth rate for the study period.

The average capital issues account for Rs.23.91

crores and Rs.12.9 crores for the 'initial issues' and

'further issues' respectively for the period. It accounts

for Rs. 30.21 crores and Rs.9.94 crores for the 'bonus

issues' and 'debenture issues' respectively. The average

'loan' contribution accounts for 68.24 per cent for the

period of the study.

'Further issues' have grown at a rate of 41.8 per

cent over the period, whereas the 'bonus issues' at 18.3

per cent. The 'loans etc' have grown at 10.94 per cent

while the total capital issues to NRIs by the Indian Joint

Stock Companies have grown at a rate of 20.67 per cent over

the period of the study. The analysis further reveals that

the major share of capital issues is that of the 'bonus

issues', though there are different types of issues to NRIs.

To'understand better the trend and progress of the

capital issues of the Indian Joint Stock companies to NRIs,

a linear trend equation is fitted for each case and the

results are presented in table V.4. It is understood from

the table that the increasing trend of the total capital

issues by the Indian Joint Stock companies ('b' value

731.10) shows that the consistency t1R2' value 0.8174) and

the growth rate are found to be statistically significant

(computed 't' value 5.60).

A trend equation is fitted for the purpose of

knowing the level of significance of the NHI contribution to

Indian Joint Stock Companies by way of capital issues.

Though the NRI share in the capital issues of the Indian

Joint Stock Companies has registered an enormous growth the

growth rate is found to be low (insignificant) as proved by

the computed 't' value of 1.74. The analysis further

reveals that the capital issues to NRIs in the form of

'initial issues' alone account for Rs.23.91 crores as an

average per annum. The overall growth rate shows that the

'initial issues' have been growing at a rate of 48.24 per

cent. However, the trend equation analysis reveals that the

growth rate is proved statistically insignificant as the

computed 't' value is only 1.57 at 5 per cent level of

significance.

It is understood from the analysis that the

capital issues to NRIs by way of 'further issues' have grown

at 41.8 per cent recording an average capital issue of about

Rs.12.95 crores annually. Though the consistency ('R2

value 0.5168) is found reasonable, the growth rate for the

capital issue to NRIs as 'further issues' is found

statistically significant (computed 't' value 2.74). The

capital issue to NRIs by the Indian Joint Stock Companies in

the form of 'bonus issues' has succeded in its objective to

the level of 18.3 per cent growth rate over the period,

recording an average inflow of investment of Rs.30.21 crores

per annum. Though, according to the trend equation

analysis, the progress of the 'bonus issues' to NRIs is

found statistically significant (computed 't' value 2.34),

the consistency with time is found low as proved by the

calculated 'R" value of 0.4397.

The growth rate for the capital issues to NRIs in

the form of 'debenture issues' is found statistically

insignificant having least relationship with time as one of

the bivariate; it has grown at a rate of 2.9 per cent only

for the period. Though the Indian Joint Stock Companies

consider NRIs as the potential investors, they have

miserably failed 4 n tapping the resour.ces from the

debenture issue. It is quite evident that the NRIs evince

keen interest in contributing towards the equity base of the

companies, but their response towards the debenture capital

is not that much encouraging.

And in fine, the growth rate of the NRI

contribution in the Indian Joint Stock Companies in the form

of 'loan' is aleo found statistically insignificant as

proved by the computed 't' value having an average flow of

investment potential of Rs.68.24 crores annually over the

period. It can be concluded that the growth of the share of

NRIs in the capital issues of Indian Joint Stock Companies

is high, though the share is statistically low. It is also

hoped from the analysis that the share of NRIs' in the

Indian captial market will be even higher in the years to

come.

PART - B

Other Investment by NHIs

Besides investing in shares and debentures of

Joint Stock companies, NRIs show a considerable interest in

investing their funds in units of UTI, Government Bonds, and

other investment schemes like NSS, NSC, etc. Of late, a

considerable number of them invest in company deposits also.

An attempt has been made in this part of the chapter to

discuss the NRI response towards these investment schemes.

Investment in Company Deposits

Year-wise progress of NRI investment in company

deposits is presented in table V.5. It is understood from

the table that though the scheme of company deposit

investment was introduced only in 1983, it has achieved

growth at an enormous rate. The NRI investment in company

deposits on repatriation basis has grown at a rate of 40.13

per cent over the period, whereas the NRI investment in

TABLE V.5

NRI Investment in Company Deposits

(Rs.in Crores)

Year ending 31st March

Source: Compiled from the Reports of the Indian Investment Centre, New Delhi.

Repatriable Non-repatri- able

3

Note: Figures in parentheses are percentages to total.

Total (2+3)

4

company deposits on non-repatriation basis has grown at a

rate of 10.27 per cent only for the same period. However,

the overall growth rate for the total (clubbing together

both the repatriable and the non-repatriable) company

deposit shows that there is an encouraging trend in the

scheme; as it has grown to the extent of 26.02 per cent over

the period. It can also be observed from the table that the

NRI share in the scheme on non-repatriation basis is high in

the initial years of the scheme. In 1984-85, an amount of

58.98 per cent of the company deposits were made on non-

repatriation basis; though the deposits on non-repatriation

basis have increased from Rs. 5.09 crores in 1984-85 to

Rs.8.3 crores in 1988-89, the proportion of deposits has

declined to 30.26 per cent. However, the deposits made on

repatriation basis have registered a higher rate: it was

only Rs. 3.54 crores in 1984-85, which accounts for 41.02

per cent of the total company deposits, and it increased to

Rs. 19.13 crores in 1988-89. It is seen that the deposits on

repatriation basis have grown almost five fold during half a

decade and the record is 69.74 per cent of the total company

deposits during the year 1988-89. So, it can be concluded

that the NRI interest has turned towards depositson

repatriation basis, as against the overwhelming response to

non-repatriation-basis-company-deposits in the initial years

of the scheme.

To understand better the trend of NRI investment

in company deposits, a linear trend equation is fitted for

each case, worked out, and is presented in table V.6. It is

inferred from the table that the NRI investment in company

deposits has grown at 40.13 per cent for the period,

recording an'average investment inflow of Rs. 12.9 crores on

repatriation basis. The trend equation analysis reveals

that the growth rate of the NRI interest in the scheme on

repatriation basis is found statistically si~nificnnt as the

computed 't' value is 3.32 at 5 per cent level, when the

'R2' value works out to 0.7857.

The table further reveals that the NRI investment

in company deposit on non-repatriation basis has grown at a

rate of 10.27 per cent over the period recording an average

flow of investment of Rs. 6.83 crores. As it is witnessed

by the computed 't' value of 4.26, the growth rate for the

scheme is found statistically significant at 5 per cent

level of significance, when the consistency is considerable

('R2' value 0.8580).

Though the NRI investment in company deposits on

repatriation basis has grown at 40.13 per cent over the

period, the overall growth rate (clubbing together both the

repatriable and the non-repatriable) of the scheme shows

that the investment has grown to the extent of 26.02 per

cent only. However, the trend equation analysis shows that

there is a sizeable rate of growth ('b' value 5.47), and

consistency ( ' R ~ ' value0.7859), and, thereby, it is found

that the success of the growth in the scheme is

statistically significant as evidenced by the computed 't'

value of 3.32 at 5 per cent level of probability.

The main reasons for the enormous growth of the

NRI investment in company deposits may be the enhanced

interest rate offered to this type of deposits and the

liberalized policy adopted by the GOI. Another attraction

may be that the company deposits are secured against the

fixed assets of the company in order to compensate the loss

that might arise in case of any company failure. In the

event of any company failure or dissolution, the NRIs

wouldn't have to lose a single rupee since the entire

deposit is secured. Further, the share of NRI investment in

company deposits is more on repatriable rather on than non-

repatriable basis since they feel that the repatriation

facility is more beneficial to them than the non-

repatriation one; an additional attraction is that an

exchange gain might arise in the event of the the

depreciated of the Indian rupee.

Like the bank deposits, the company deposits

may depend on the exchange rates of the dominant currencies

which have been permitted for investment in company

deposits. In order to understand the relationship between

the NRI investment in company deposits and AER for f , a

simple correlation analysis has been attempted, and the

results are presented in table V.7. It is observed from the

table that there is a hiehly positive correlation between

the company deposits made by NRIs and the AER for f as shown

by the computed ' r ' value of 0.9844. The table also reveals

that there- is a positive correlation between the NRI

investment in company deposits and the AER for $ for the

period as evidenced by the computed 'r' value of 0.8987.

TABLE V.7

Correlation Co-efficient for NRI Investment in Company Deposits and Interest

Rates on NRI Banh Deposits and E x c w g e Rates on $ and P

Correlation Correlation Co-efficent Between Co-efficient

( ' r' Value) I ! I Company Deposit and AIR on FCNR Account I - 0.1345 1

Further, a simple correlation analysis has been

attempted to understand the dependency relationship between

the company deposits made by NRIs, and the AIR on NRER and

FCNR deposits. The analysis reveals that there is a

positive correlation between the company deposits and the

AIR on NRER deposit as shown by the 'r' value of 0.1844.

However, there is a negative correlation (-0.1345) between

the company deposit and the AIR on FCNR deposit.

Company Deposit and AIR on NRER Account

Company Deposit and AER for $

Company Deposit and AER for C

It can therefore be concluded that there is a

positive correlation between the exchange rates and company

0.1844

0.9844

0.8987

Source : Computed Results from the Compiled data

deposits. While there is a positive correlation between the

company deposit and the interest rate on NRER deposit, a

negative correlation is found between the company deposit

and the interest rate on FCNR deposit. So, it can be said

that the NRI investment in company deposit is dependent on

the exchange rate of $ and f and the NRER interest rate, but

not on the interest rate of FCNR deposit.

NRI Investment in units of UTI

Scheme-wise Analysis

Though there are several schemes for NRI

investment in units of UTI, the dominant schemes such as

'Unit scheme 1964 ' , 'Re-investment Plan', and 'Children's

Gift Plan' have been taken into account for the analysis.

The analyses are made on the basis of applications and the

investment by NRIs (sales and outstanding). The scheme-wise

progress of NRI investment in units of UTI is presented in

table V.8.

It is understood from the table that out of ttre

applications sold to NRIs for the investment in units of UTI

in different schemes, those in the 'Re-investment Plan'are

greater in numbers. It alone accounts for 863 (59.15 per

cent) in 1978-79 as against 2170 applications (53.73 per

cent) in 1987-88.

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. . , . , , , , , , , ,

It can be seen from the table that out of the

different schemes available under UTI. NRI share is higher

in 'Unit Scheme 1964'. It has been maintained the NRI

investment in this scheme alone amounts to more than 80 per

cent level for all the years under study, except the year

1987-88 during which the share of NRI investment accounts

for 78.23 per cent only.

It is also observed that the NRI investment in

'Re-investment Plan' accounts for a meagre share of Rs.8.38

lakhs in 1978-79 to Rs.436 lakhs in 1987:88. However, the

interest of the NRIs in the plan is picking as evidenced at

17.67 per cent in 1987-88 as against a very low share of

1.46 per cent in 1978-79.

NRI investment in the 'Children's Gift Plan'

accounts for a very low share. However,, the investment

under the scheme is found to be growing.

From the analysis, as a whole, it can be concluded

that while the share of NRI investment is growing to a high

rate in the 'Unit Scheme 1964', the growth found in the 'Re-

investment Plan' and 'Children's Gift Plan' have been

progressing at a low rate.

Trend equation analyses are also attempted to

understand statistically the growth of NRI investment in

various schemes of units of UTI, and the results of the

analyses are given in table V.9. It is inferred from the

table that the NRI interest in 'Unit Scheme 1964' has been

increasing at a rate of 19.9 per cent recording an annual

average investment inflow of Rs.189-5 lakhs. However the

total progress of outstanding NRI investment in the scheme

is found to be growing at a rate of 13.4 per cent only. The

results of the trend equation, fitted for the purpose, show

that there is a sizeable consistency with time in the

interest of the NRIs in the scheme as shown by the ' R ~ '

value of 0.8238. It is also found statistically

significant, as the computed 't' value is 6.12 at 5 per cent

level.

The table reveals that the share of NRI in the

'Re-investment Plan' has also been increasing at an enormous

rate of 48.5 per cent recording an average outstanding

investment inflow of Rs.114.8 lakhs for the period.

However, the net annual inflow of NRI investment in the

scheme accounts for 22.5 per cent growth only, recording an

average inflow of Rs.35.4 lakhs per annum. The trend

equation fitted also supports the results of the growth rate

(IR'I value 0.7400), and it is found that the NRI interest

in the scheme is growing interestingly, and the growth rate

is proved statistically significant ('t' value 4.77) at 5

per cent level.

1w Y.9

Trmd of t h a d ~ e R l l n m t m t ' in h i t s d I l l 1

IA~eraqe I 8routh 1 Trend Value I Standard:'!' Value I 'R1'ValueI t o - e l l i c i c n t l I Sthew : I n v e s t ~ e n t I Rrte l lY . I t b x l I Error I : I 01 variation: 1IRs.ln I 1 Lakhsl : ' ( -, I I I I - I

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Iksount of Baler j 189.5 / 19.1 j 189 .S2 t15 .8~~ / 1 1 . ~ 8 j 3.15 1 O.bbll j 85.18 j 1 1 lh l .P I I

ik#ount outstandin! i 9SI.b 1 13.1 j 152.61t131.0llrj21.125 j 6.11 i 0.8238 j 13.52 : (1I4,bl :

~ ~ 5 t l r t V l a n j 1316.5 1 9.6 1 131b.5+131.S01 111.b19 1 10.bh 0.9312; 29.15 j i t I I400.bI : j l ippi l~at ion~utstandinqf~1 1315.8 1 9.3 1 1315,8~131.8?1ijll.5h9 / 11.19 i 0,1120j 19.64 1

I (390. l l : Arounl of Sales I 35.1 j 22.5 I 35.3bt8.81~xI1.1600 1 1.98 : 0.1561 j 81.81 I

I 128.1l ;

ihlount Outstanding i 111.8 j 18.5 i 111.83+11.511xi 7.8b31 j 1.11 1 0.1400 i 109.10 j 11125.31 i

L l d r c n ' s i t P : h5.5 1 12.5 I 81.88t17.11x j b.9105 / 0.11 0.0015 j 35.90 j lRpPiitatiDn Sales : ISb.31 I ikppl lcat ion ~ u t s t m d i n p l l j 511.6 i 10.6 512.b~65.1P(x j b.lb93 j 10.31 j 0.1301 / 31.05 j

: I l81 .9 l j Ikanunt o f Srles : 9.1 1 11.0 1 9.11+1.14lx 1 5.8281E i 2.17 j 0,1122 j b1.51 i.

1 16.31 1 - 0 1 , i b r o u n t ~ u t s t i n d l n g / 51.0 i 11.2 1 51t10.281xj b.91551~i 14.80 / 0.9641; 51.71 /

I 130.11 i I - 0 1 j i l o ta l R o a ~ l I 1 1169.0 ) 10.7 j 2 l b ~ t 2 b l . 8 ~ l x ~ 3 5 . l l l 1.50 0.8755 1b.11 j :Sales : 1812.3I I lOulstandlng jl0018.b 1 6.3 j10018.b+b95.141xilb.563 i 9.09 i 0 . 9 1 1 6 ~ 10.76 j

:ao92.8l

I101aI l n v t r t f i m t i 231.b j 10.0 / 231.bt5b.O)lx i l l . 9b0 j 4.61 0.1331 / 80.16 j 13ales 11188.11 ;

I0utstandinp j Q l 9 . 5 1 15.7 i l l l ~ . 5 t l l 0 . 8 l l x ~ 2 9 . ~ l l j 6.05 j 0.8101; 50.65 j I I$b l .b l j (-I-'

F ~ g u r n i n p l r m t l n w dmote s l rnd l rd devir l ions. ) S l p n ~ l i r m t r t 5 per r n ! l eve l

I ~ p p l i r a t l m I n n u e b r s 8 w r t e 1 C m p u t d m u 1 1 1 I r a * LLe c w ~ l l t d d l t a

160

The next major share of investment by NRIs in

units of UTI is the 'Children's Gift Plan'. The interest of

the NRIs in this plan alone has grown at 14 per cent,

whereas, the outstanding share of NRIs has grown at 21.2 per

cent accounting an average investment inflow of Rs.52 lakhs

annually. The growth rate,of the scheme is found to be

consistent ( ' R ~ ' value 0.9647) and statistically significant

as the computed 't' value is 14.80 at 5 per cent level.

The growth rate of the overall NRI investment in

these schemes is only 15.7 per cent for the period.

However, the rates of growth these schemes show an upward

trend and the consistency is reasonable ( 'Fi2' value 0.8205).

As a whole, the growth rate is found statistically

significant as proved by the computed 't' value of 6.05 at 5

per cent level.

In fine, it may be concluded that the NRI

investment in all those schemes under UTI is found to be

growing at a higher rate excepting the 'Children's Gift

Plan' and the 'Unit Scheme 1964'. However, the growth rate

for all these schemes under UTI is found statistically

significant. The reasons for the higher values of the trend

may be the greater attraction of the former schemes. Later

the NRI interest might have turned to the recently

introduced schemes.

Source-wise Analysis of NRI Investment in Units of UTI

The main sources of investment are 'direct

remittances from abroad', 'transfer from NRER and FCNR

accounts', 'transfer from NRO account', and 're-investment

of dividend', etc. NRIs are allowed to invest in the units

of UTI under all the available schemes mobilising the

deposit from any one of the sources. The source-wise

figures of NRI investment in different schemes under UTI are

presented in table V.lO.

It is inferred from the table that most of the NRI

investment in units of UTI has been made from the source of

'NRO account' followed by the 'NRERIFCNR accounts'. The

share of 'remittance from abroad' and 're-investment of

dividend', etc., account for the least investment in

different schemes of units of UTI.

It can be understood that the source of 'NRO

account' accounts 54.73 per cent in the year 1987-88, as

against 33.27 per cent in 1978-79; the source of 'NRER/FCNR

accounts' records 36.97 per cent (Rs.40.08 lakhs) in 1978-79

as against 27.49 per cent (Rs.430 lakhs) in 1987-88,

registering more than a ten-fold increase over a decade. It

is clear that the NRIs' share in the investments of units of

UTI (from the source of 'NRER/FCNRt and 'NRO accounts') has

positively increased; but the investment in units of UTI

from the source of 'NRER/FCNR accounts' shows a declining

h c r r l u 1111 I n v f ~ t n a t s I n L l t n of U l l h r l n q I?+ [lhrwnt RI. I n L l l h s l

hourcr of Funds I : 8 ' : h n r 1Rnltt1ncr i r o n 1 1 1 ~ n ~ i e r 1108 1 l r a n t f ~ r i r o n :R f - lnv rs t~ rn t 1 1 tndlnq / Rbro~d IMRIRIFCYR Account; MO Rrraunt ;of V i l d f n d I U n c l ~ s s f ~ l d j l o t n l 1 1 Sill , I - - * - * {march 1 ' ' ' ' ' ' ' 1 I I A p p l l u - 1 k o u n t I ! I l pp l l ca - / h u n t /Appl ica-/~8cunt ihpp l1c~- / h u n t jlppl1c1-/ Anount 1Appllc1-I Anwnt 1 t i a l l t 1 l l I + 5 + l + I 1 1 t l on I t lon I I t ion I I t lon 1 I t l o n I 1tbt8+101/ 9t111 j / I I I , J I I J J I I I-(-(-I-I-I-I-I-I-I-I-(-I

1 I j 2 j 3 I 1 I 5 1 6 I 1 I 8 1 9 l l O j l 1 j l 2 j 1 S j > , , , , < , ~-'-I-,-I-~-

trend, and in the case of 'NRO account' the share of the

source has been increasing at a higher rate. It may be due

to the interest of the NRIs returning in the following years

to utilise fully the funds invested on non-repatriation

basis.

The investment from the sources 'remittances from

abroad' and 're-investment of dividend' has slightly

declined. However, these sources have been picking up in

terms of 'remittances from abroad' accounting for Rs.168

lakhs in 1987-88, as against Rs.13.34 lakhs in 1978-79,

registering about a thirteen-fold increase over a decade.

The investment from the source of 're-investment of

dividend, etc'., has increased to Rs. 98 lakhs in 1987-88

from Rs.9.48 lakhs in 1978-79 recording more than a ten-fold

increase over the period. This, according to the source-

wise analysis, shows that the share of investment is

declining. But the NRI investment has registered a more

than ten-fold growth over the period.

The progress of source-wise NRI investment in

units of UTI is also tested with the help of a statistical

tool of trend equation analysis. It has been fitted for

each case, worked out, and the results of the analyses are

shown in table V.11. It is inferred from the table that the

investment from the source of 'remittance from abroad' has

grown at 28.8 per cent as a whole for the period, recording

l r m l 01 W i c ) d ~ RI Imvnht i n bits 01 1111

> 4

1Avrrrpr 1 Growth 1 l rend Value 1 S t m d r r d l ' l ' Value I 'RI'Valuel Co- r f l l c l rn t : ; Sourc! I l nv rs tn rn t I Rate 1 IY = r t bxl : Error :

f 8 1 1 of v1 r i r t lm1

I1Rs.in 1 1 ;11khrI ; 1 G-, I I I ' ( - 4

a t l l t t r n c r i f ro1 Abroad : 281.1 1 11.5 : 101.1t81.111x 1 2b.813 j 3.13 1 O.SJO5 ; 111.X j A p p l ~ c I t i ~ n ~ l ~ I 1325.61 1 , 4

< 4

; Alounl j 11.1 / 18.0 ~11 .12 t15 .18 lx j 1.13lb! 3.33 j 0 . ~ 8 1 2 j 135.10 / I lJ9,Sl 1

2 8 < , , , ' C r ~ d ~ l ~ d ir01 NRERliCNR Ac[ountr 1lO.b : 21,l 1 1101Ltl15,211x 1 10.909 j 1,18 j 0.6963 j 81,8l j : A p p l ~ c r t i o n r l l : 1b03.11 1

Gnount 1 110.8 : lb.O 1 138.82+58.921~ 1 8.4350 1 1.61 1 0.12b9 1 91.1b : : 1131.11 :

Iredltpd i ron MA0 Account 1 121.2 1 20.0 I 311.2+12.181x j l 1 . L l l j 1.98 1 0.7562 j 11.11 j A p p l l r a t i o n ~ t I : 1210.11 1 Gnount j 29L.S / 11.3 / 29b.S3+lOA,lAIx /18.813 j 5.b4 / 0.1'192 115.01

11311.11 1

Re-inuert#mt of Divldrnt, e t i . ; 1317.5 1 9.1 ~1311,5+131.1$x 1 11,513 ; 10.11 1 0.'1349 29.10 1 l i p p l i r a t ~ o n d l 1 1100.31 1

, t , Anount : 12.3 1 26.3 1 12 .29 l l l . l l t x 1 1.80351 A.lb 1 0.82581 83.W j

: 115.11 1 : 19,1+5.011 : 1,18901 0,10 1 0,0013 j L9.35 j

a A~ount I b.4 : 1.1 1 b.11+0.8Al l1: 3.9b3bE; 2.21 1 0.38b81 b3.77 1 : 11.11 / : -01 1 ( ( I - , ' I , '

Figures I n parrnlherel d r n ~ t r r t a n d ~ r d devlrt ionr. ' S i ~ n i i l c r n t r t 5 prr c rn t l r v e l

' l R p p l l r r t r ~ n I n nunbrrs l ' ~ S l q n i l l r m t at onr $ t r cent l r v r l

Sourrr: Conputrd r t r u l t s trot the r w p i l s d d ~ t a

an average investment inflow of Fis.47.4 lakhs per annum.

The growth rate is found statistically significant as proved

by the computed ' t ' value of 3.33 at 5 per cent level.

While the average inflow of investment from the

source Of 'transfer from NRER/FCNR accounts' records

Rs.138.8 lakhs, it accounts for Rs.324.2 lakhs from the

source of 'transfer from NRO account'. The overall growth

rate of the investment from the sources are also found at

26.8 per cent and 37.3 per cent respectively for the said

sources. From the table it is clear that the trend equation

analysis for the NKI investment from the sources of

'NRER/FCNR1 and 'NRO accounts' reveals that the growth rates

of the investment from the said sources are found to be

statistically significant. The computed 't' values of 4.61

and 5.64 are for the sources of 'NRER/FCNR1 and 'NRO

accounts' respectively. In addjtion, the growth rate and

relationship for the investment from these sources are

almost similar/equal as shown by the calculated 'R2' values

of 0.7269 and 0.7992 respectively for the sources.

The N R I investment from the source of 're-

investment of dividend' i n units of UTI has grown at 26.3

per cent fcr the period, registering an average investment

inflow of Rs.42.3 lakhs per annum. The consistency is also

is Statistically significant, as evidenced by the computed

't' Value of 6.16 at 5 per cent level. The investment from

the source 'unclassified' has grown at 2.4 per cent only

recording an average investment inflow of Rs.6.4 lakhs per

annum. llowever, the trend equation analysis reveals that

the growth rate for the NRI investment from the source

'unclassified' 1s statistically significant, as proved by

the computed It' value of 2 . 2 5 at one per cent level.

From these analyses it can be concluded that the

overall growth of the NRI investment from all the said

sources is statistically significant. It means that the NRI

interest in units of UTI in general has been growing at an

enormous rate.