The correct answer is option 4 - "Foreign Portfolio Investment". In India, the term "hot money" is used to refer to Foreign Portfolio Investment (FPI).
Foreign Portfolio Investment refers to investments made by foreign individuals, institutional investors, or hedge funds in financial assets such as stocks, bonds, and mutual funds in another country. These investments are considered to be "hot" or volatile because they can quickly enter or exit a market, leading to significant fluctuations in the value of the local currency and financial markets.
Hot money flows are often driven by short-term investment strategies and speculative activities, as investors aim to take advantage of short-term profit opportunities. These investments can be easily withdrawn or moved to other countries, making them susceptible to sudden changes in economic and political conditions.
Option 1 - "Currency + Reserves with the RBI" refers to the total foreign currency reserves held by the Reserve Bank of India (RBI) and should not be confused with hot money flows.
Option 2 - "Net GDR" refers to the net amount raised through Global Depository Receipts (GDRs) issued by companies, which is also unrelated to hot money flows.
Option 3 - "Net Foreign Direct Investment" refers to long-term investments made by foreign entities in the