International Investment Position

India’s total overseas financial assets, as per RBI compilations, amounted to $447.8 billion by the end of fiscal 2013, declining from $437.2 billion a year ago and $441.9 billion two years back. Earlier, overseas assets had increased rapidly to $379 billion in 2010 and $441.9 billion in 2011; from $346 billion in the global recession year 2008-09, which reflected a dip, compared to $387 billion in the boom year 2007-08. In a major medium-term trend, the ratio of the country’s overseas financial assets to GDPmp has declined to 24.3 per cent in fiscal 2013, from 24.5 per cent in 2012, 25.3 per cent two years back and a recent high of 31.2 per cent in 2008.

Reserve assets (reflecting foreign exchange reserves with RBI including SDR and monetary gold) declined by $2 billion; over $10 billion drop in 2012. Earlier, 2010 and 2011 had recorded $26-27 billion average rise and fiscal 2009 a $58 billion drop in forex reserves. Nevertheless, reserve assets, which amounted to $292.1 billion at the end of fiscal 2013, has remained the most dominant component of the external assets, and barring declines in some recent years, they have been on the rise in the new millennium. However, due to faster rise in FDI overseas, the share of reserve assets in external assets has dropped to 65 from a recent high of 81 per cent five years back.

The growth in foreign direct investment overseas slowed to $7 billion in 2013, from $11 billion in the preceding fiscal and $17 billion two years back. Nevertheless, in an immediate medium term, FDI overseas indicates a shoot up from around $31 billion at the end of March 2007 to $50 billion by 2008, crossing $100 billion mark in 2011 and scaling to $120 billion by March 2013. The ratio of stock of FDI overseas to FDI into the country increased from 40 per cent in 2006-07 to 53 per cent in 2008-09. The ratio, however, eased to 46-47 per cent in fiscal 2010 & 2011, followed by a recovery to 50-51 per cent in the next two years.

The currency and deposits, portfolio investment, loans, trade credit etc. form around 9 per cent of foreign financial assets of the country.

EXTERNAL ASSETS AND LIABILITIES (US$ BILLION)
 
31.3.2012
31.3.2013
Assets
Direct Investment Abroad
112.4
119.5
Portfolio Investment
1.5
1.4
Trade Credit, Loans, Deposits etc
29
34.8
Reserve Assets
294.4
292.1
Total Assets
437.2
447.8
Liabilities
Direct Investment
222.2
233.7
Portfolio Investment
165.8
183
Trade Credit, Loans, Deposits etc
298.7
338.5
Tot Liabilities
686.7
755.1
Tot Liabilities less Assets
249.5
307.3

External liabilities
The country’s external liabilities totaled $755 billion, against $687 billion a year ago and $649 billion two years back. The external liabilities were 41 per cent of GDPmp.Taking assets and liabilities, the country’s total external investment stake works out to 65 per cent of GDPmp.
Around 52 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 48 per cent of external obligations. Equity investment under FDI was $223 billion and in portfolio route $139 billion. Debt security formed 23 per cent in portfolio investment and equity 77 per cent; against their respective shares of 5 per cent and 95 per cent five years ago. Among the other debt obligations, loans (mainly ECBs) were 22 per cent, trade credit, and currency and deposits 12 and 9 per cent respectively and general government 8 per cent of country’s financial liabilities.

Net assets deficit
The net IIP (Liabilities-Assets) of India i.e. total net claims of non-residents, or the country’s net assets deficit shot up to $307 billion by March 2013, from $249 billion a year ago, $207 billion two years back and $158 billion at the end of the fiscal 2010.


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