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India™s International Investment Position (IIP), March 2013

International Investment Position (IIP) is a statistical statement that shows, at a point in time, the value and the composition of (a) financial assets of residents of an economy that are claims on non-residents and gold bullion held as reserve assets; and (b) 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. Such balance sheet analysis of international accounts helps in understanding sustainability and vulnerability and is also useful in analysing the economic structure. Following are the highlights of IIP for the quarter-ended March 2013:

I. Overall International Investment Position

(a) Quarterly Variations:

Net claims of non-residents on India (as reflected by the Net IIP, i.e. International financial assets abroad less International financial liabilities) increased by US$ 27.1 billion over the previous quarter to US$ 307.3 billion as at end-March 2013, mainly on account of US$ 31.0 billion increase in liabilities (Table 1). The changes in IIP also reflect the valuation changes emanating from exchange rate movements.

The Indian residents™ financial assets abroad stood at US$ 447.8 billion as at end- March 2013 recording an increase of US$ 3.9 billion over previous quarter. Reserve assets, which remained the major component of international financial assets, decreased by US$ 3.5 billion to US$ 292.1 billion at end-March 2013. Direct investment abroad moved up by US$ 1.4 billion during the quarter to US$ 119.5 billion as at end- March 2013 and Other Investment abroad (mainly currency and deposits) increased by US$ 6.1 billion.

The International financial liabilities increased by US$ 31.0 billion over the previous quarter to US$ 755.1 billion as at end- March 2013. Direct investments in India and and portfolio investments in India moved up by US$ 8.6 billion and US$ 13.9 billion respectively. Among other investments liabilities, trade credit and currency and deposits (mainly NRI deposits) increased by US$ 4.4 billion and US$ 3.2 billion respectively.

Due to rupee appreciation during end-December 2012 to end-March 2013 equity liabilities in US$ term revised upwards by US$ 2.4 billion (US$ 1.5 billion in direct investment and US$ 0.9 billion in portfolio investment).

The ratio of India™s international financial assets to international financial liabilities decreased to 59.3 per cent in March 2013 (61.3 per cent in December 2012).

(b) Annual Variations

International financial assets abroad increased by US$ 10.6 billion on a year-on-year basis (Table 1). Among the external financial assets, direct investment abroad moved up by US$ 7.1 billion. Reserve assets declined by US$ 2.3 billion.

International financial liabilities increased by US$ 68.4 billion on a year-on-year basis. Both direct investment and portfolio investment in India increased by US$ 11.5 billion and US$ 17.2 billion respectively. The other investment liabilities in the form of trade credit, loan and currency and deposits increased by US$ 39.8 billion.

As a result of the above changes in external assets and liabilities, net claims of non-residents on India increased by US$ 57.8 billion as at end- March 2013, on a year-on-year basis.

II. Ratios of International Financial Assets and Liabilities to Gross Domestic Product (GDP)

The ratio of total international financial assets to GDP (at current market prices) slightly declined to 24.3 per cent as at end-March 2013 from 24.5 per cent a year ago. Reserve Assets to GDP ratio declined to 15.9 per cent as at end-March 2013 from 16.5 per cent as at end-March 2012.

The ratio of total international financial liabilities to GDP rose to 41.0 per cent as at end-March 2013 from 38.5 per cent a year ago. Among the international financial liabilities, the ratio to GDP of Direct investment stood at 12.7 per cent whereas the ratio of Portfolio Investment to GDP stood at 9.9 per cent as at end-March 2013.

The ratio of net IIP of India to GDP was -16.7 per cent as at end-March 2013 as compared with -14.0 per cent as at end-March 2012 (Table 2).

III.Composition of External Financial Assets and Liabilities

Reserve Assets continued to have the dominant share (65.2 per cent) in India™s international financial assets in March 2013, followed by direct investment abroad (26.7 per cent) (Table 3).

Direct Investment (with share of 31.0 per cent), portfolio investment (24.2 per cent), loans (mainly ECBs) (22.0 per cent) were the major constituents of the country™s financial liabilities. The other investment component of liabilities viz. trade credit and currency and deposits contributed to 11.8 and 9.4 per cent of country™s financial liabilities (Table 3).

IV. External Debt Liabilities vis-à-vis External Non-Debt Liabilities

Due to faster growth of direct investment and portfolio equity investment liabilities in US dollar terms, the share of non-debt liabilities increased to 48.0 per cent as at end- March 2013 from 47.5 percent at end -December 2012 (Table 4).
As per the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF), data on IIP are to be disseminated on an annual basis with a time lag of two quarters (quarterly dissemination encouraged with one quarter™s lag). India™s quarterly IIP are being disseminated with one quarter lag and the last quarterly IIP as at end-December 2012 was put in public domain on March 28, 2013.

Table 1: Overall International Investment Position of India

(US $ billion)

Period

Mar-12 (PR)

Jun-12 (PR)

Sep-12 (PR)

Dec-12 (PR)

Mar-13 (P)

Net IIP

-249.5

-225.3

-270.3

-280.2

-307.3

A. Assets

437.2

432.9

442.6

443.9

447.8

1. Direct Investment

112.4

114.5

115.8

118.1

119.5

2. Portfolio Investment

1.5

1.5

1.5

1.5

1.4

2.1 Equity Securities

1.5

1.4

1.5

1.4

1.3

2.2 Debt Securities

0.0

0.0

0.1

0.1

0.1

3. Other Investment

29.0

27.2

30.4

28.7

34.8

3.1 Trade Credits

0.0

4.5

6.9

5.7

3.9

3.2 Loans

6.0

3.7

3.7

3.5

4.9

3.3 Currency & Deposits

11.1

6.9

7.8

6.9

13.1

3.4 Other Assets

11.9

12.1

12.0

12.6

12.9

4. Reserve Assets

294.4

289.7

294.8

295.6

292.1

B. Liabilities

686.7

658.1

712.9

724.1

755.1

1. Direct Investment

222.2

205.5

229.0

225.1

233.7

2. Portfolio Investment

165.8

148.3

164.7

169.1

183.0

2.1 Equity Securities

125.3

110.5

125.7

128.9

139.5

2.2 Debt securities

40.5

37.8

39.0

40.1

43.5

3. Other Investment

298.7

304.4

319.3

329.9

338.5

3.1 Trade Credits

67.3

72.7

76.9

84.6

89.0

3.2 Loans

160.2

160.7

164.8

165.6

165.9

3.3 Currency & Deposits

58.8

61.1

67.2

67.8

71.0

3.4 Other Liabilities

12.3

9.9

10.3

12.0

12.6

PR: Partially revised P: Provisional;
Note: 1. The sum of the constituent items may not add to the total due to rounding off.

 

Table 2: Ratios of External financial Assets and Liabilities to GDP

(per cent)

Period

Mar-11 (R)

Mar-12 (PR)

Mar-13 (P)

Net IIP (Assets – Liabilities)

-11.9

-14.0

-16.7

A. Assets

25.3

24.5

24.3

1. Direct Investment Abroad

5.8

6.3

6.5

2. Portfolio Investment

0.1

0.1

0.1

2.1 Equity Securities

0.1

0.1

0.1

2.2 Debt Securities

0.0

0.0

0.0

3. Other Investment

2.0

1.6

1.9

3.1 Trade Credits

0.3

0.0

0.2

3.2 Loans

0.4

0.3

0.3

3.3 Currency and Deposits

0.7

0.6

0.7

3.4 Other Assets

0.6

0.7

0.7

4. Reserve Assets

17.5

16.5

15.9

B. Liabilities

37.2

38.5

41.0

1. Direct Investment in India

12.3

12.5

12.7

2. Portfolio Investment

9.6

9.3

9.9

2.1 Equity Securities

7.6

7.0

7.6

2.2 Debt securities

2.0

2.3

2.4

3. Other Investment

15.3

16.8

18.4

3.1 Trade Credits

3.5

3.8

4.8

3.2 Loans

8.3

9.0

9.0

3.3 Currency and Deposits

3.0

3.3

3.9

3.4 Other Liabilities

0.6

0.7

0.7

Note: Ratios are derived based on Rupee figures.

 

Table 3: Composition of International Financial Assets and Liabilities of India

(per cent)

Period

Mar-12 (PR)

Jun-12 (PR)

Sep-12 (PR)

Dec-12 (PR)

Mar-13 (P)

A. Assets
1. Direct Investment

25.7

26.4

26.2

26.6

26.7

2. Portfolio Investment

0.3

0.3

0.4

0.3

0.3

3. Other Investment

6.6

6.4

6.9

6.5

7.8

4. Reserve Assets

67.4

66.9

66.5

66.6

65.2

Total

100.0

100.0

100.0

100.0

100.0

B. Liabilities
1. Direct Investment

32.4

31.2

32.1

31.1

31.0

2. Portfolio Investment

24.2

22.5

23.1

23.3

24.2

3. Other Investment

43.4

46.3

44.8

45.6

44.8

Total

100.0

100.0

100.0

100.0

100.0

PR: Partially revised P: Provisional;

 

Table 4: Share of External Debt and Non-Debt Liabilities of India

(per cent)

Period

Mar-12 (PR)

Jun-12 (PR)

Sep-12 (PR)

Dec-12 (PR)

Mar-13 (P)

Non-Debt Liabilities

49.3

46.6

48.3

47.5

48.0

Debt Liabilities

50.7

53.4

51.7

52.5

52.0

Total

100.0

100.0

100.0

100.0

100.0

PR: Partially revised P: Provisional;

 

Tags: foreign direct investmentGDPGross domestic productIndiaInternational Monetary FundMarch 2013Net international investment positionSpecial Data Dissemination Standard

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