India’s International Investment Position (IIP), June 2016

International Investment Position (IIP) is a statistical statement that shows, at a point in time, the value and the composition of (a) financial assets of residents of an economy that are claims on non-residents, and gold bullion held as reserve assets; and (b) liabilities of residents of an economy to non-residents. The difference between an economy's external financial assets and liabilities is its net IIP, which may be positive or negative. Such balance sheet analysis of international accounts is an important input for understanding external sustainability and vulnerability, and is also useful in analysing the economic structure.


The highlights of IIP for the quarter-ended June 2016 are as follows:


I. Overall International Investment Position
  • Net claims of non-residents on India (as reflected by the net IIP) decreased by US$ 8.1 billion over the previous quarter to US$ 353.1 billion as at end-June 2016 (Table 1). This change in the net position reflected a US$ 6.0 billion decrease in the value of foreign-owned assets in India vis-à-vis a US$ 2.1 billion increase in the value of Indian Residents’ financial assets abroad.
  • Indian residents’ financial assets abroad stood at US$ 552.2 billion as at end-June 2016 exhibiting an increase of US$ 2.1 billion over previous quarter mainly due to increase of US$ 3.3 billion in Reserve assets and US$ 1.8 billion in direct investment, even as loans declined by US$ 1.9 billion during the quarter.
  • Foreign-owned assets in India decreased by US$ 6.0 billion over the previous quarter to US$ 905.3 billion as at end-June 2016 mainly due to the decrease in portfolio investments in India and currency and deposits by US$ 4.3 billion and US$ 0.6 billion, respectively.
  • Effects of Exchange Rate movement: Variation in exchange rate of rupee vis-a-vis other currencies affected change in liabilities, when valued in US$ terms. Although there was a net equity inflow of US$ 7.6 billion during the period. Equity liabilities decreased by US$ 0.5 billion from US$ 422.1 billion in March 2016 to US$ 421.6 billion in June 2016, on account of exchange rate change during the quarter.
  • The ratio of India’s international financial assets to international financial liabilities stood at 61.0 per cent in June 2016 (60.4 per cent in March 2016).


II. Composition of External Financial Assets and Liabilities
  • Reserve Assets continued to have the dominant share (65.8 per cent) in India’s international financial assets in June 2016, followed by direct investment abroad (26.0 per cent) (Table 2).
  • Direct Investment (32.5 per cent), portfolio investment (24.4 per cent), loans (18.8 per cent), and currency and deposits (14.0 per cent) were the major constituents of the country’s financial liabilities in June 2016.

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

The share of non-debt liabilities increased marginally to 46.6 per cent as at end-June 2016 from 46.3 percent at end-March 2016 (Table 3).

Table 1: Overall International Investment Position of India

(US $ billion)

Period

Jun-15(PR)

Sep-15(PR)

Dec-15(PR)

Mar-16(PR)

Jun-16(P)

Net IIP

-361.6

-357.0

-361.7

-361.2

-353.1

A. Assets

534.8

529.5

532.8

550.1

552.2

1. Direct Investment

134.2

135.8

139.0

141.6

143.4

2. Portfolio Investment

1.6

1.7

1.7

2.5

1.6

      2.1 Equity Securities

1.5

1.6

1.6

1.6

0.7

      2.2 Debt Securities

0.1

0.1

0.1

0.9

0.9

3. Other Investment

43.0

41.7

41.7

45.8

43.7

3.1 Trade Credits

5.1

4.7

4.5

2.9

2.4

3.2 Loans

4.4

4.2

3.7

6.7

4.8

3.3 Currency & Deposits

17.1

16.7

17.3

20.9

21.3

3.4 Other Assets

16.4

16.1

16.1

15.3

15.2

4. Reserve Assets

356.0

350.3

350.4

360.2

363.5

B. Liabilities

896.4

886.5

894.5

911.3

905.3

1. Direct Investment

271.4

271.3

282.6

293.9

294.1

2. Portfolio Investment

236.3

225.4

225.3

224.8

220.5

      2.1 Equity Securities

151.4

143.6

141.7

141.9

141.5

      2.2 Debt securities

84.9

81.8

83.6

82.9

79.0

3. Other Investment

388.7

389.8

386.6

392.6

390.7

3.1 Trade Credits

81.3

81.3

79.5

82.3

82.1

3.2 Loans

174.1

171.8

170.8

170.5

170.5

3.3 Currency & Deposits

120.1

122.0

122.8

127.1

126.5

      3.4 Other Liabilities

13.3

14.7

13.4

12.7

11.6

Memo item: Assets to Liability Ratio (%)

59.7

59.7

59.6

60.4

61.0

R: Revised       PR: Partially revised       P: Provisional;
The sum of the constituent items may not add to the total due to rounding off.


Table 2: Composition of International Financial Assets and Liabilities of India

(per cent)

Period

Jun-15(PR)

Sep-15(PR)

Dec-15(PR)

Mar-16(PR)

Jun-16(P)

A. Assets






1. Direct Investment

25.1

25.7

26.1

25.8

26.0

2. Portfolio Investment

0.3

0.3

0.3

0.4

0.3

3. Other Investment

8.0

7.9

7.8

8.3

7.9

4. Reserve Assets

66.6

66.1

65.8

65.5

65.8

    Assets/Liabilities

100.0

100.0

100.0

100.0

100.0

B. Liabilities

1. Direct Investment

30.3

30.6

31.6

32.2

32.5

2. Portfolio Investment

26.4

25.4

25.2

24.7

24.4

3.Other Investment

43.3

44.0

43.2

43.1

43.1


Table 3: Share of External Debt and Non-Debt Liabilities of India

(per cent)

Period

Jun-15(PR)

Sep-15(PR)

Dec-15(PR)

Mar-16(PR)

Jun-16(P)

Non-Debt Liabilities

45.8

45.3

46.0

46.3

46.6

Debt Liabilities

54.2

54.7

54.0

53.7

53.4

Total

100.0

100.0

100.0

100.0

100.0


1India’s quarterly IIP is being disseminated with one quarter lag and the previous quarterly IIP as at end-March 2016 was placed in the public domain on June 30, 2016.




Source: RBI Press Release # 2016-2017/822 dated 30th September 2016