INTERNATIONAL INVESTMENT POSITIONThe country's total international
financial assets, as
per RBI compilations,
recovered partly to $378.8
billion by the end of 2009-10,
from a dip to $346.2 billion in the
global recession year 2008-09.
Earlier, the country's overseas
financial assets were on the rise,
scaling 57 per cent to $385.5 billion
in the boom year 2007-08.
The ratio of overseas monetary
assets to GDP at market prices
declined from 31.2 per cent in
2007-08 to 27.4 per cent in 2009-
10. The country's external liabilities
totalled $536.5 billion against
$409 in 2008-09 and $436.6 billion
2007-08. The external liabilities
were 38.9 per cent (35.3 per
cent) of GDP at market prices.
Taking assets and liabilities, the
country's total external stake
works out to 66 per cent of GDP.
The net IIP (liabilities-assets) of
India i.e. total net claims of nonresidents
worked out to $157.6
billion, more than twice that in the
preceding year and three times
$51.2 billion two years ago.
Assets
Reserve Assets (reflecting foreign
exchange reserves with RBI
including SDR and monetary
gold), which amounted to $279.1
billion, remained the most dominant
component of external
assets and, barring a decline in
2008-09, they were on the rise.
However, their share in external
assets dropped to 73-74 per cent
in 2008-09 and 2009-10, from a
recent high of 82 per cent four
years ago. The share erosion
reflected a faster rise in FDI overseas,
more than the decline in
forex reserves.
External Assets and Liabilities ($ billion) |
| |
March 2008 |
March 2009 |
March 2010 |
| Assets |
| Direct Investment Abroad |
49.78 |
67.28 |
79.23 |
| Portfolio Investment |
0.65 |
1.17 |
0.84 |
| Trade credit, loans, deposits etc |
25.31 |
25.73 |
19.71 |
| Reserve Assets |
309.72 |
251.99 |
279.06 |
| Total Assets |
385.46 |
346.16 |
378.84 |
| Liabilities |
| Direct Investment |
118.78 |
125.19 |
174.4 |
| Portfolio Investment |
117.95 |
83.15 |
133.4 |
| Trade credit, loans, deposits etc |
199.90 |
200.65 |
228.57 |
| Total Liabilities |
436.64 |
408.99 |
536.46 |
| Total Liabilities less Assets |
51.18 |
62.83 |
157.61 |
Securities accounted for around
47 per cent, currency and
deposits 41 per cent, and SDR,
monetary gold etc. 12 per cent of
reserve assets. The share of direct
overseas investment shot up from
9 per cent to 21 per cent, while the
share of loans, trade credit etc. fell
from 9 per cent to 5 per cent.
Indian citizens are not major
players on global bourses; their
stock of portfolio investment
abroad has been assessed at just
around $1 billion.
FDI overseas shot up by $15.9
billon in 2006-07 to $49.8 billion
in 2007-08 and another 60 per
cent to $79.2 billion in 2009-10.
The ratio of stock of FDI overseas
to FDI into the country increased
from 30 per cent in 2006-07 to 54
per cent in 2008-09, though the
share eased to 45 per cent in the
subsequent year due to FDI into
the country recovering faster than
FDI overseas.
Reserve Assets, which had shot
up 31 per cent in 2006-07 and 55
per cent in 2007-08, declined 19
per cent to $252 billion in 2008-09,
before recovering to $279 billion
in the subsequent year. Reserve
assets exceeded the entire external
debt consisting of loans, debt
securities (in portfolio investment),
trade credits, currency and
deposits etc., though the cover
dropped to 1.08 times from 1.40
times two years ago. Direct investment
and portfolio investment
(excluding debt securities) does
not carry contractual obligation of
repayment at face value.
Liabilities
Around 49 per cent of country's
external financial liabilities
were in the form of repayable
trade credits, loans, debt securities,
other capital, currency
and deposits etc. Non-debt
commitments like portfolio
investment (equity part) and
direct investment accounted
for 51 per cent of external obligations.
This was probably the
first time that debt obligations
have fallen below non-debt
obligations. Loans comprised
48 per cent of debt liabilities,
trade credit and currency and
deposits 19 per cent each, and
debt securities (part of portfolio
investment) 11 per cent.
In non-debt liabilities, FDI shot
up two-fold over four years to
$174.5 billion, while portfolio
investment in equity nearly doubled
to $105 billion. Portfolio debt
security investment rose from $10
billion to $28 billion.