Overseas claims on Indians up $17.7 bn at $317.2 bn in Q3-FY’14

Net claims of non-residents on India as reflected by the net international investment position increased by $17.7 billion over the previous quarter to $317.2 billion as of end-December 2013.

This change in the net investment position reflected an increase of $39.9 billion in the value of foreign-owned assets in India vis-à-vis an increase of $22.2 billion in the value of Indian residents' financial assets abroad, Reserve Bank of India (RBI) said in a release.

Indian residents' financial assets abroad stood at $458.9 billion as of end-December 2013, recording an increase of $22.2 billion over previous quarter, mainly due to a $16.7 billion increase in reserve assets and a $5.8 billion increase in other investments abroad, mainly trade credit and currency and deposits.

Direct investment abroad registered a marginal decline of $0.3 billion.

Foreign-owned assets in India increased by $39.9 billion over the previous quarter to $776.1 billion, mainly due to increase of $23.6 billion in currency and deposits component of 'other investment', RBI said.

Direct investment in India and portfolio investment in India also increased by $8.6 billion and $5.6 billion, respectively. In portfolio investment, while equity investment increased by $8.0 billion, debt investment decreased by $2.4 billion.

Among other investment liabilities, trade credits declined by $1.2 billion and loans increased by $3.2 billion.

RBI said the variation in the exchange rate of the rupee vis-à-vis other currencies affected change in liabilities, when valued in $ terms. Equity liabilities in $ terms increased by $16.3 billion, due to the stock valuation effect resulting from rupee appreciation, while net inflow was $11.5 billion during the period.

Reserve assets continued to have the dominant share (64.0 per cent) in India's international financial assets in December 2013, followed by direct investment abroad (26.1 per cent). Direct investment (29.2 per cent), portfolio investment (22.8 per cent), loans - mainly ECBs - (22.1 per cent), trade credit (11.4 per cent) and currency and deposits (12.7 per cent) were the major constituents of the country's financial liabilities.

The share of non-debt liabilities decreased marginally to 44.8 per cent as of end-December 2013 from 45.1 per cent at end-September 2013.

India's International Investment Position (IIP) - Quarter ended December 2013.

International investment position is a statistical statement that shows the value and the composition of financial assets of residents of an economy that are claims on non-residents and gold bullion held as reserve assets and liabilities of residents of an economy to non-residents at a point in time.

The difference between an economy's external financial assets and liabilities is its net international investment position. Such an analysis of international accounts helps in understanding sustainability and vulnerability of the economy's external sector.