Net claim of NRIs decline by $13.2 billion in FY 09

The international investment position (IIP) of India at the end of March 2009 revealed that the net claim of non-residents of India as reflected by the net IIP, which is international assets less international liabilities, of India as at end-March 2009, declined by $13.2 billion to $65.3 billion from $78.5 billion as at end of December 2008.

The total external financial assets increased by $8 billion to $349.9 billion at the end of March 2009 over the previous quarter.

Among the other components of external financial assets, other investment increased by $7.8 billion over the end of December 2008 and stood at $29.9 billion at end of March 2009, the data showed.

Direct investment abroad increased by $4.8 billion over the previous quarter to $67.3 billion at the end of March 2009.

The increase in other investment component of assets was mainly contributed by trade credits and currency and deposits, noted the data.

Meanwhile, portfolio investment abroad has declined by $0.6 billion to $0.8 billion at the end of March primarily due to decline in investment in equity securities abroad. The reserve assets stood at $251.9 billion exceeding the entire external debt of $229.9 billion by $22 billion at the end of March 2009.

The total external financial liabilities declined by $5 billion over the previous quarter and stood at $415.3 billion as at end of March 2009. This decline was mainly attributed to outflow by FIIs from portfolio equity investment during January to March 2009 and also on account of the effect of valuation changes.

Trade credit liabilities increased by $2.1 billion to $47.9 billion at end of March 2009 over the previous quarter.

Meanwhile, the ratio of net IIP of India to GDP was -6.3% at end of March 2009 as compared to -4.5% at end of March 2008.

At the same time, total external financial assets to GDP (at current prices) ratio increased to 33.5% at end of March 2009 from 32.6% at end of March 2008 and reserve assets to GDP ratio declined to 24.1% at the end of March 2009 from 26.2% at end of March 2008. The ratio of total external financial liabilities to GDP increased to 39.8% compared to 37.1% in March 2008.

Among the external financial liabilities, the ratio to GDP, of direct investment and other investment witnessed an increasing trend from end of March 2007 to end of March 2009 while the ratio to GDP of portfolio investment declined to 8.1% at the end of March 2009 from 10.2% at end of March 2008.

At the end of March 2009, nearly 49.5% of country?s external financial liabilities were in the form of other investment like trade credits, loans, currency and deposits and other liabilities. Direct Investment and portfolio investment accounted for 30% and 20.5% respectively of total external financial liabilities.