India’s Quarterly International Investment Position: December 2010

posted 13 Apr 2011, 04:31 by CA Naresh Shah

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 helps in understanding sustainability and vulnerability and is useful for analysing economic structure, studying the relationship to domestic sources of financing and other policy considerations.

As per the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF), data on IIP are to be disseminated on an annual basis with a time lag of two quarters (quarterly encouraged with one quarter’s lag). India’s quarterly IIP was being disseminated with a lag of less than two quarters since June 2006 and, subsequently, the lag is reduced to one quarter since June 2009. The last quarterly IIP as at end-September 2010 was put in public domain on December 31 2010.

Following are the highlights of IIP for the quarter-ended December 2010:

I. Overall International Investment Position

(a) Quarterly Variations:

  • Net claims of non-residents on India as reflected by the Net IIP (International financial assets less International financial liabilities) increased by US$ 18.2 billion over the previous quarter to US$ 221.1 billion as at end- December 2010, mainly due to increase in net inflow on account of direct and portfolio investments as well as external commercial borrowings (ECBs) (Table I).

  • International financial assets stood at US$ 407.5 billion as at end-December 2010 with increase of US$ 4.6 billion over the previous quarter. Reserve assets, which remained the major source, increased by US$ 4.5 billion to US$ 297.3 billion at end-December 2010. Among other sources, Direct Investment abroad moved up by US$ 3.2 billion during the quarter to US$ 92.4 billion as at end-December 2010.

CA Naresh Shah,
13 Apr 2011, 04:33