Net claims of non-residents on India declines by $1.2 bn to $356.5 bn

Net claims of non-residents on India, measured in terms of the country's net international investment position (IIP) declined marginally by $1.2 billion over the previous quarter to $356.5 billion as of end-December 2014.

During the quarter ended December 2014, the value of Indian residents' financial assets overseas increased by $2 billion while foreign-owned assets in India increased by $0.8 billion.

Indian residents' financial assets abroad increased by $2.0 billion in the October-December 2014 to $490.5 billion, showing an increase of $6.9 billion in reserve assets even as other investments abroad (trade credit, loans, currency and deposits, etc) declined by $5.3 billion.

Foreign-owned assets in India increased by $0.8 billion over the previous quarter to $847.0 billion, mainly due to an increase of $1.4 billion in other investment in India, although the stock of portfolio investment in India declined by $0.6 billion.

Within other investments under liabilities, currency and deposits and loans (mainly external commercial borrowings) increased by $1.3 billion each, whereas trade credit declined by $1.5 billion.

A change in the rupee value vis-à-vis other currencies also helped reduce overseas liabilities of India. Further, there was a net equity inflow of $7.1 billion during October-December 2014 - outstanding equity liabilities declined from $385.9 billion in September 2014 to $382.4 billion in December 2014 - due to rupee depreciation during the period.

The ratio of India's international financial assets to international financial liabilities stood at 57.9 per cent in December 2014  against 57.7 per cent in September 2014.

Reserve assets continued to have the dominant share (65.4 per cent) in the country's international financial assets in December 2014, followed by overseas direct investment (26.4 per cent).

Direct Investment (29.8 per cent), portfolio investment (25.0 per cent), loans (21.1 per cent), and currency and deposits (13.0 per cent) were the major constituents of the country's financial liabilities.

The share of non-debt liabilities declined marginally to 45.2 per cent as of end-December 2014 from 45.6 per cent at end-September 2014.

International investment position (IIP) is an estimate based on 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.