Net claim of non-residents on India, as reflected by net International Investment Position (assets – liabilities) as of end-December 2008, increased by $14.6 billion to $80.1 billion from $65.5 billion at end-September 2008.
India's total external financial assets declined by $16.7 billion to $340.3 billion as of end-December 2008 over the previous quarter mainly due to fall in reserve assets to the tune of $30.4 billion a Reserve Bank Release said..
Among the other components of external financial assets, `other investment' increased by $7.8 billion over end-September 2008 and stood at $21.9 billion at end-December 2008. Direct investment abroad increased by $5.9 billion over the previous quarter to $61.8 billion as at end-December 2008.
Total external financial liabilities of the country declined by $2.2 billion over the previous quarter and stood at $420.3 billion as of end-December 2008. This decline was mainly attributed to outflow by FIIs from portfolio equity investment during October-December 2008 and also on account of the effect of valuation changes.
Loan component of 'other investment' in India, increased by $8.5 billion during quarter end-December 2008 over end-September 2008 and direct investment in India increased by $1.9 billion during the same period. Trade credit, which showed increasing trend over the previous quarters, declined by $3.0 billion over the previous quarter to $45.8 billion as at end-December 2008.
Reserve assets of the country stood at $255.9 billion exceeding the entire external debt ($230.8 billion) by $25.1 billion as at end-December 2008.
Assets vs liabilities
The share of reserve assets in the total external financial assets, declined to 75.2 per cent as at end-December 2008 from 80.2 per cent as at end-September 2008. Direct investment and `other investment' accounted for 18.2 per cent and 6.4 per cent respectively of the total external financial assets.
As of end-December 2008, nearly 48.4 per cent of the country's external financial liabilities were in the form of `other investment', ie, trade credits, loans, currency and deposits and other liabilities. Direct investment and portfolio investment accounted for 29.3 per cent and 22.2 per cent respectively of total external financial liabilities.
Debt liabilities and non-debt liabilities: The share of non-debt liabilities to total external financial liabilities declined to 44.9 per cent at end-December 2008 from 46.6 per cent as of end-September 2008 mainly due to equity out flow by FIIs.
The International Investment Position (IIP), compiled at the end of a specific period, is the statement of the stock of external financial assets and liabilities of a country. The financial assets consist of the country's financial claims on non-residents and financial liabilities consist of the country's financial liabilities to non-residents. These transactions are classified according to institutional resident sectors, namely, monetary authority, government, banks, and other sectors, including corporate sector. The net international investment position (the stock of external financial assets less the stock of external financial liabilities) shows the difference between what an economy owns in relation to what it owes, the RBI release said.
RBI, under the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF), disseminates on annual basis with a time lag of two quarters. In India, since the quarter end-June 2006, the IIP is being disseminated on quarterly basis with a lag of less than two quarters. The quarterly IIP as of end-September 2008 was released on RBI website on 19 March 2009.
The quarterly IIP of India as of end-December 2008 has been compiled now, it said.