First, India is widely perceived to be among the fastest growing major economies in the world in 2022 2, when the other major economies may encounter recession or considerable moderation in their growth momentum. The favorable growth differential of India provides confidence to investors. This is amply reflected in the surge of portfolio flows into India since July 2022.
Inflows in August alone at $ 7.5 billion are more than 16  2  World Economic Outlook Update, July 2022, IMF. 2  times the net inflows in July. Second, the recent softening of commodity prices and supply chain pressures have eased the terms of trade shock that India faced in the aftermath of the pandemic and the war.