India's Net International Investment Position (IIP) showed an improvement with its net liabilities declining to $224.9 billion during the quarter ended September 2011, from $237.5 billion at end-June 2011. The $16.7 billion reduction in net liabilities, however, was partially offset by a smaller decline of $4.1 billion in the country's foreign exchange assets, which was due mainly to exchange rate movements, the Reserve Bank of India data showed.
The country's international financial assets stood at $434.7 billion at end-September 2011, showing a decline of $4.1 billion over the previous quarter. Reserve assets, which remained the major source, decreased by $4.2 billion to $311.5 billion at end-September 2011. Among other sources, direct investment abroad moved up by $2.9 billion during the quarter to $109.1 billion at end-September 2011.
International financial liabilities of the country decreased by $16.7 billion over the previous quarter to $659.6 billion at end-September 2011. Direct and portfolio investments in India decreased by $11.6 billion and $14.5 billion, respectively. Among other investments, trade credit and loans (mainly ECBs) increased by $2.9 billion and $7.5 billion, respectively.
Equity liabilities for June 2011 were revised downwards by $34.3 billion when valued at end-September 2011 exchange rate (which included $19.2 billion in direct investment and $15.1 billion in portfolio investment).
Net claims of non-residents on India as reflected by the net IIP (International financial assets less International financial liabilities) decreased by $12.6 billion over the previous quarter to $224.9 billion as at end-September 2011.
The declining trend in the ratio of India's international financial assets to international financial liabilities improved during the latest quarter and the ratio stood at 65.9 per cent in September 2011 (64.9 per cent by June 2011), RBI said in a release.
India's international financial assets increased by $27.8 billion on a year-on-year basis. Among external financial assets, direct investment abroad and reserve assets moved up by $17.6 billion and $18.6 billion, respectively.