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 is an important input for understanding external sustainability and vulnerability, and is also useful in analysing the economic structure.

The highlights of IIP for the quarter-ended September 2014 are as follows:

• Net claims of non-residents on India (as reflected by the net IIP) increased by US$ 6.8 billion over the previous quarter to US$ 353.7 billion as at end-September 2014 (Table 1). This change in the net position reflected a US$ 3.5 billion increase in the value of foreign-owned assets in India vis-à-vis a US$ 3.3 billion decrease in the value of Indian Residents’ financial assets abroad.

• Indian residents’ financial assets abroad stood at US$ 488.5 billion as at end-September 2014 showing a decrease of US$ 3.3 billion over the previous quarter mainly due to a decrease of US$ 2.3 billion in Reserve assets.

• Foreign-owned assets in India increased by US$ 3.5 billion over the previous quarter to US$ 842.1 billion mainly due to increase of US$ 1.9 billion in direct investment in India and increase of US$ 0.9 billion in portfolio investment in India. Among other investment liabilities, currency and deposits increased by US$ 2.5 billion and loans (mainly external commercial borrowings) decreased by US$ 0.9 billion.

• Effects of Exchange Rate movement: Variation in exchange rate of rupee vis-a-vis other currencies affected change in liabilities, when valued in US $ terms. Even as there was equity inflow of US $ 6.7 billion (net) during July-September 2014, outstanding  liabilities declined by US$  2.9 billion, from US$ 386.4 billion in June 2014 to US$ 383.5 billion in September 2014, due to the  revaluation of outstanding liabilities as a result of 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).

Composition of External Financial Assets and Liabilities

• 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) (Table 2).

• 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.

Debt Liabilities vis-à-vis Non-Debt Liabilities

The share of non-debt liabilities decreased marginally to 45.5 per cent as at end- September 2014 from 46.1 per cent at end- June 2014 (Table 3).

Sangeeta Das
Director

Press Release : 2014-2015/1373

¹ India’s quarterly IIP is being disseminated with one quarter lag and the previous quarterly IIP as at end-June  2014 was released on the RBI website on September  30, 2014.