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-September 2008 was released on RBI website on March 19, 2009.

The quarterly IIP of India as at end-December 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-December 2008, increased by US$ 14.6 billion to US$ 80.1 billion from US$ 65.5 billion as at end-September 2008 (Table I).

• The total external financial assets declined by US$ 16.7 billion to US$ 340.3 billion as at end-December 2008 over the previous quarter mainly due to fall in Reserve Assets to the tune of US$ 30.4 billion.

• Among the other components of external financial assets, Other Investment increased by US$ 7.8 billion over the end-September 2008 and stood at US$ 21.9 billion at end-December 2008.  Direct Investment abroad increased by US$ 5.9 billion over the previous quarter to US$ 61.8 billion as at end-December 2008.

• The total external financial liabilities declined by US$ 2.2 billion over the previous quarter and stood at US$ 420.3 billion as at end-December 2008. This decline was mainly attributed to outflow by FIIs from Portfolio equity investment during October-December 2008 and also on account of the effect of valuation changes.

• Loan component of 'Other Investment' in India, increased by US$ 8.5 billion during  quarter end-December 2008 over end-September 2008 and Direct Investment in India increased by US$ 1.9 billion during the same period. Trade credit, which showed increasing trend over the previous quarters, declined by US$ 3.0 billion over the previous quarter at US$ 45.8 billion as at end-December 2008.

• The Reserve Assets stood at US$ 255.9 billion exceeding the entire external debt (US$ 230.8 billion*) by US$ 25.1 billion as at end-December 2008.

II.  Composition of External Financial Assets and Liabilities

• The share of Reserve Assets in the total external financial assets, declined to 75.2 per cent as at end-December 2008 from 80.2 per cent as at end-September 2008. Direct Investment and Other Investment accounted for 18.2 per cent and 6.4 per cent respectively of the total external financial assets (Table II).

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

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

• The share of non-debt liabilities to total external financial liabilities declined to 44.9 per cent at end-December 2008 from 46.6 per cent as at end-September 2008 mainly due to equity out flow by FIIs.

G. Raghuraj
Deputy General Manager

Press Release : 2008-2009/1927