Net claims of non-residents on India up $6.8 bn at $353.7 bn in end-September

Net claims of non-residents on India as measured by the country's international investment position (IIP) rose $6.8 billion to $353.7 billion as of end-September, from $346.9 billion in the quarter ended June.

This change reflected a $3.5 billion increase in the value of foreign-owned assets in India vis-à-vis a $3.3 billion decrease in the value of Indian residents' financial assets abroad, Reserve Bank of India (RBI) said.

The value of Indian-owned assets abroad stood at $488.5 billion as of end-September 2014.

On the other hand, foreign-owned assets in India grew $3.5 billion over the previous quarter to $842.1 billion, mainly due to a rise of $1.9 billion in direct investment in India and an increase of $0.9 billion in portfolio investment in India, RBI stated.

Among other investment liabilities, currency and deposits increased by $2.5 billion and loans (mainly external commercial borrowing) decreased by $0.9 billion.

RBI said variation in exchange rate of rupee vis-a-vis other currencies affected change in liabilities, when valued in US dollar terms. Against equity inflows of $6.7 billion (net) during July-September 2014, outstanding  liabilities declined by $2.9 billion, from $386.4 billion in June 2014 to $383.5 billion in September 2014, due to the  revaluation of outstanding liabilities following rupee depreciation during the period.

The ratio of India's international financial assets to international financial liabilities stood at 58.0 per cent in September 2014 (58.6 per cent in June 2014).

Reserve assets continued to have the dominant share (64.2 per cent) in India's international financial assets in September 2014, followed by direct investment abroad (26.5 per cent).

Direct investment (30.0 per cent), portfolio investment (24.4 per cent), loans (21.2 per cent), and currency and deposits (12.9 per cent) were the major constituents of the country's financial liabilities.

The share of non-debt liabilities decreased marginally to 45.5 per cent as of end- September 2014 from 46.1 per cent at end-June 2014.

International investment position (IIP) is a statistical statement that shows, at a point in time, the value and the composition of financial assets of residents of an economy that are claims on non-residents, and gold bullion held as reserve assets and liabilities of residents of an economy to non-residents. The difference between an economy's external financial assets and liabilities is its net IIP, which may be positive or negative.