Net overseas claims on Indian assets down $8.1 bn at $353.1 bn in Q2

Net claims of non-residents on India (as reflected by the net IIP) during the April-June 2016 quarter and stood at $353.1 billion at end-June 2016, showing a decrease of $8.1 billion over the previous quarter.

This change in the net position reflected a $6.0 billion decrease in the value of foreign-owned assets in India vis-à-vis a $2.1 billion increase in the value of Indian residents' financial assets abroad, data released by the Reserve Bank of India (RBI) showed.

Indian residents' financial assets abroad stood at $552.2 billion as of end-June 2016, showing an increase of $2.1 billion over the previous quarter mainly due to increase of $3.3 billion in reserve assets and $1.8 billion in direct investment, even as loans declined by $1.9 billion during the quarter.

Foreign-owned assets in India decreased by $6.0 billion over the previous quarter to $905.3 billion as of end-June 2016 mainly due to the decrease in portfolio investments in India and currency and deposits by $4.3 billion and $0.6 billion, respectively.

Variation in exchange rate of rupee vis-a-vis other currencies affected change in liabilities, when valued in dollar terms. Although there was a net equity inflow of $7.6 billion during the period. Equity liabilities decreased by $0.5 billion from $422.1 billion in March 2016 to $421.6 billion in June 2016, on account of exchange rate change during the quarter.

The ratio of India's international financial assets to international financial liabilities stood at 61.0 per cent in June 2016 against 60.4 per cent in March 2016.

Reserve assets continued to have the dominant share (65.8 per cent) in India's international financial assets in June 2016, followed by direct investment abroad (26.0 per cent).

Direct Investment (32.5 per cent), portfolio investment (24.4 per cent), loans (18.8 per cent), and currency and deposits (14.0 per cent) were the major constituents of the country's financial liabilities in June 2016.

The share of non-debt liabilities increased marginally to 46.6 per cent as of end-June 2016 from 46.3 per cent at end-March 2016.

The 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.