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The International
Investment Position (InIP), compiled at the end of a specific period such as
end-March, is the statement
of the stock of external financial assets and liabilities of a country. The
financial assets consist of the country's financial claims on non-residents
and financial liabilities consist of the country's financial liabilities to
non-residents. These transactions are classified according to institutional
resident sectors, namely, monetary authority, government, banks, and other sectors
(includes corporate sector). The net international investment position (the
stock of external assets less the stock of external liabilities) shows the difference
between what an economy owns in relation to what it owes. The net InIP, combined
with the stock of an economy’s non-financial assets, constitutes the net worth
of that economy.
As per the
Special Data Dissemination Standard (SDDS) of the International Monetary Fund
(IMF), data on InIP are to be disseminated on annual (quarterly encouraged)
basis with a time lag of two quarters. The InIP of India is disseminated annually
as at the end of March and the InIP of India as at the end of March 2005 was
last released in September 2005. The latest InIP as at the end of March 2006
is released now. Major highlights of International Investment Position of India
are presented below.
International
Investment Position (InIP) of India as at end-March 2006 Major Highlights
I. Over all Position
(1) Net
InIP is the stock of external assets less the stock of external liabilities.
The net position has decreased by around US$ 6 billion during the year under
review. This could be attributed to the widening of current account deficit
from US$ 5.4 billion in 2004-05 to US$ 10.6 billion in 2005-06.
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Table
1. InIP of India
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at
the end-March
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(in
US$ Billion)
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Period
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2003PR
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2004PR
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2005PR
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2006P
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International Investment
Position, net
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-60.46
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-45.27
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-40.31
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-46.07
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A. Assets
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95.59
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137.78
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168.90
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183.13
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1. Direct Investment
Abroad
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5.83
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7.76
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10.11
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12.07
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2. Portfolio Investment
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0.78
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0.76
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0.81
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1.29
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2.1 Equity Securities
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0.37
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0.40
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0.40
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0.65
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2.2 Debt Securities
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0.41
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0.36
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0.41
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0.64
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3. Other Investment
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12.88
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16.31
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16.48
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18.15
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3.1 Trade Credits
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1.10
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1.90
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2.77
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0.96
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3.2 Loans
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1.41
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1.76
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1.87
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2.55
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3.3 Currency and
Deposits
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7.52
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9.47
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8.44
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11.17
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3.4 Other Assets
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2.86
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3.17
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3.40
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3.47
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4. Reserve Assets
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76.10
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112.96
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141.51
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151.62
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B. Liabilities
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156.05
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183.12
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209.22
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229.20
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1. Direct Investment
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31.22
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38.18
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43.59
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50.26
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2. Portfolio Investment
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32.41
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43.70
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55.28
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63.36
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2.1 Equity Securities
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20.09
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33.93
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42.74
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54.33
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2.2 Debt securities
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12.32
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9.77
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12.53
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9.03
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3. Other Investment
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92.42
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101.25
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110.34
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115.58
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3.1 Trade Credits
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4.88
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6.28
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9.56
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10.54
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3.2 Loans
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61.05
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61.87
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65.76
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67.77
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3.3 Currency and
Deposits
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25.57
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32.18
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33.64
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36.16
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3.4 Other Liabilities
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0.92
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0.92
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1.39
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1.11
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Note- PR:
Partially revised; P: Provisional; [figures in the Table have been compiled
based on InIP estimates in terms of US $ Million]
(2) Reserve
assets remained the most dominant component of the external assets.
(3) Total
reserve assets as on end-March 2006 exceeded the entire external debt (US $
125.2 billion at the same reference period) by around US $ 26 billion.
II. Ratios of External
Assets and Liabilities to GDP (at current prices)
(1) Reserve assets accounted for around 21 per cent of the country's GDP
(at current prices). Consequently, external assets at the end of March 2006
accounted for around 25.5 per cent of the country's GDP.
(2) The ratio of total external liabilities to GDP remained between 31 per cent
to 33 per cent during the period under review.
(3 Among the external liability components, the ratio of portfolio equity investment
to GDP increased from 6.8 per cent at the end of March 2003 to 8.8 at the end
of March 2006. Further, while the ratio of direct investment to GDP has witnessed
increasing trend in the last three years of the review period, the ratio of
other investment to GDP has decreased gradually over the years under review.
Table
2. Ratios of External Assets and Liabilities to GDP (at current prices)
(in per
cent)
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Period
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2003PR
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2004PR
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2005PR
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2006P
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International Investment
Position, net
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-12.74
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-7.73
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-6.20
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-6.40
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A. Assets
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20.15
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23.54
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25.99
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25.45
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1. Direct Investment
Abroad
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1.23
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1.33
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1.56
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1.68
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2. Portfolio Investment
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0.16
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0.13
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0.12
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0.18
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2.1 Equity Securities
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0.08
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0.07
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0.06
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0.09
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2.2 Debt Securities
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0.09
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0.06
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0.06
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0.09
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3. Other Investment
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2.72
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2.79
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2.53
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2.52
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3.1 Trade Credits
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0.23
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0.32
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0.43
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0.13
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3.2 Loans
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0.30
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0.30
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0.29
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0.35
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3.3 Currency and
Deposits
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1.58
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1.62
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1.30
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1.55
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3.4 Other Assets
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0.60
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0.54
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0.52
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0.48
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4. Reserve Assets
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16.04
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19.30
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21.77
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21.07
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B. Liabilities
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32.89
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31.28
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32.19
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31.86
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1. Direct Investment
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6.58
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6.52
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6.71
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6.99
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2. Portfolio Investment
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6.83
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7.46
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8.50
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8.81
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2.1 Equity Securities
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4.23
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5.80
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6.58
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7.55
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2.2 Debt securities
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2.60
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1.67
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1.93
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1.25
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3. Other Investment
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19.48
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17.29
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16.98
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16.06
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3.1 Trade Credits
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1.03
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1.07
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1.47
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1.47
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3.2 Loans
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12.87
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10.57
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10.12
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9.42
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3.3 Currency and
Deposits
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5.39
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5.50
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5.18
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5.03
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3.4 Other Liabilities
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0.19
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0.16
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0.21
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0.15
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Note- PR:
Partially revised; P: Provisional; [figures in the Table have been compiled
based on InIP estimates in terms of US $ Million]
III. Composition of External
Assets and Liabilities
(1) The
major part of country's external assets is in the form of reserve assets. The
share of reserve assets in total external assets of the country steadily increased
during the previous three financial years. However, the same has slightly declined
in 2005-06.
(2) Around
7 per cent of the country's external assets are in the form of Direct &
Portfolio Investments.
(3 )More
than 50 per cent of the country's external liabilities are in the nature of
other investments, i.e., trade credit, loans, currency & deposits and other
liabilities. However, the share of this component in total liabilities, declined
from 59.2 per cent at the end-March 2003 to 50.4 per cent at the end-March 2006.
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Table
3. Composition of External Assets and Liabilities
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( in
per cent)
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Period
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2003PR
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2004PR
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2005PR
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2006P
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A. Assets
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1. Direct Investment
Abroad
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6.09
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5.63
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5.98
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6.59
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2. Portfolio Investment
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0.82
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0.55
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0.48
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0.70
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3. Other Investment
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13.48
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11.83
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9.75
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9.91
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4. Reserve Assets
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79.61
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81.98
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83.78
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82.80
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Total
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100.00
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100.00
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100.00
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100.00
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B. Liabilities
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1. Direct Investment
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20.01
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20.85
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20.84
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21.93
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2. Portfolio Investment
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20.77
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23.86
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26.42
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27.64
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3. Other Investment
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59.22
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55.29
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52.74
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50.43
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Total
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100.00
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100.00
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100.00
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100.00
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Note- PR:
Partially revised; P: Provisional [figures in the Table have been compiled based
on InIP estimates in terms of US $ Million]
IV. External Debt Liabilities
vis-à-vis External Non-Debt Liabilities
The share of non-debt
liabilities to total external liabilities continued to increase for all the
years under study.
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Table
4. External Debt vis-à-vis External Non-Debt Liabilities
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(
in per cent)
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Period
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2003PR
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2004PR
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2005PR
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2006P
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Non-Debt Liabilities
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32.88
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39.38
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41.27
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45.63
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Debt Liabilities
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67.12
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60.62
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58.73
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54.37
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Total
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100.00
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100.00
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100.00
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100.00
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Note- PR:
Partially revised; P: Provisional [figures in the Table have been compiled based
on InIP estimates in terms of US $ Million]
P.V.Sadanandan
Manager
Press Release : 2006-2007/456
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