India may attract more capital flows: RBI

India is likely to witness a surge in capital inflows because of the Euro crisis,says RBI.

India is likely to witness a surge in capital inflows as investors may find the country an attractive bet in the backdrop of an uncertain global environment,a top Reserve Bank official said.

“Money tries to come to places where it gets better returns. So from the point of view of capital flows,you do have the likelihood of more uncertainty in the rest of the world and therefore more money coming to India,” RBI Deputy Governor Usha Thorat said.

Foreign Institutional Investors have,so far,invested around USD 5 billion in the domestic share market against a total investment of USD 17.45 billion in 2009.

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Policymakers,worldwide,are watching the developments associated with the euro zone crisis,which broke out after Greece nearly defaulted on public debts.

To avert the deepening crisis,euro zone countries and the International Monetary Fund formed a USD one trillion rescue package to bail-out Greece.

The Reserve Bank,which has started withdrawing emergency monetary stimulus measures of the crisis period,is in a dilemma about hiking policy rates next month to facilitate the exit while the recovery is still nascent.