Over the last few weeks, there have been some signs of foreign capital flows trickling back in. In July, foreign portfolio investors have so far poured in $1.5 billion in the equity markets, reversing the trend of massive capital outflows witnessed in the months before. Last week, the RBI also disclosed that after the measures it had announced to boost capital flows, so far, $17.4 billion had been mopped up through the FCNR(B) route, and another $3.3 through other channels. In April and May, net FDI stood at $6.5 billion, as compared to $2.4 billion over the same period last year. Not only are gross FDI inflows higher, but so far, repatriation is lower than last year. These are encouraging signs. Yet, at the same time, concerns are also mounting. Fresh headwinds are buffeting the economy.

Global crude oil prices have edged upwards, hitting $100 as the conflict of West Asia has reignited concerns over energy supplies. With the Houthis in Yemen attacking oil tankers in the Red Sea, the theatre of conflict has expanded. After the Strait of Hormuz, now cargo movement through the Bab al-Mandab strait is at risk. The renewed conflict comes........

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