Economics · Economy

Evaluate the following statements regarding Foreign Direct Investment (FDI) and Foreign Portfolio/Institutional Investor (FPI/FII) policies in India: Statement 1: FDI is characterized as a 'hot money' component of the Capital Account, seeking short-term trading gains, while FII is considered a more stable, long-term commitment to the economy. Statement 2: The FDI policy in sectors like Insurance and Defence is regulated by two routes: the Automatic Route (no prior government approval) and the Government Route (requiring prior approval from the concerned Ministry). Statement 3: The majority of FDI into India is often routed through countries like Singapore and Mauritius due to favourable Double Taxation Avoidance Agreements (DTAAs), though recent treaties aim to curb potential treaty abuse. Statement 4: FDI is governed by the Foreign Exchange Management Act (FEMA), 1999, and the regulatory body for its implementation is primarily the Reserve Bank of India (RBI), in conjunction with the Department for Promotion of Industry and Internal Trade (DPIIT). Statement 5: Foreign Portfolio Investment (FPI) limits for single corporate debt exposure are capped at 20 percent of the outstanding debt of that entity, while limits for sovereign debt are set annually as a percentage of the outstanding stock. Which of the statements given above are correct?