The International Investment Position (IIP), compiled at the end of a specific period, is the statement of the stock of external financial assets and liabilities of a country. The financial assets consist of the country's financial claims on non-residents and financial liabilities consist of the country's financial liabilities to non-residents. These transactions are classified according to institutional resident sectors, namely, monetary authority, government, banks, and other sectors including corporate sector. The net international investment position (the stock of external financial assets less the stock of external financial liabilities) shows the difference between what an economy owns in relation to what it owes.

As per the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF), data on IIP are to be disseminated on annual basis (quarterly encouraged) with a time lag of two quarters. In India, since the quarter end-June 2006 onwards, the IIP is being disseminated on quarterly basis with a lag of less than two quarters. The quarterly IIP as at end-June 2008 was released on RBI website on December 10, 2008.

The quarterly IIP of India as at end-September 2008 has been compiled now and the major highlights are summarized below:

I. Overall International Investment Position

• Net claim of non-residents on India as reflected by the net IIP (Assets – Liabilities) of India as at end-September 2008, increased by US$ 10.2 billion to US$ 62.2 billion from US$ 52.0 billion as at end-June 2008 (Table I).
  
  
• The total external financial assets declined by US$ 19.7 billion to US$ 358.2 billion as at end-September 2008 over the previous quarter mainly due to fall in Reserve Assets to the tune of US$ 25.8 billion.
  
  
• Among the other components of external financial assets, Direct Investment abroad increased by US$ 3.2 billion over the previous quarter to US$ 55.9 billion as at end-September 2008. Other Investment increased by US$ 2.9 billion over the end-June 2008 and stood at US$ 15.4 billion at end-September 2008.

• The total external financial liabilities declined by US$ 9.5 billion over the previous quarter and stood at US$ 420.5 billion as at end-September 2008. This decline was mainly attributed to outflow by FIIs from Portfolio equity investment during July-September 2008 and also on account of the effect of valuation changes.
  
• The Reserve Assets stood at US$ 286.3 billion exceeding the entire external debt (US$ 222.6 billion*) by US$ 63.7 billion as at end-September 2008.

*: As published in External Debt Statistics of India, September 2008, MOF, GOI.

II. Composition of External Financial Assets and Liabilities

• The share of Reserve Assets in the total external financial assets, declined to 79.9 per cent as at end-September 2008 from 82.6 per cent as at end-June 2008. Direct Investment and Other Investment accounted for 15.6 per cent and 4.3 per cent respectively of the total external financial assets (Table II).

• As at end-September 2008, nearly 47.0 per cent of country ’s external financial liabilities were in the form of Other Investment, i.e. trade credits, loans, currency & deposits and other liabilities. Direct Investment and Portfolio Investment accounted for 28.8 per cent and 24.2 per cent respectively of total external financial liabilities.

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

• The share of non-debt liabilities to total external financial liabilities after increasing from 40.9 per cent as at end-June 2006 to 49.7 per cent as at end-December 2007, declined to 46.8 per cent at end-September 2008.

Ajit Prasad
Manager

Press Release : 2008-2009/1540