External debt jumps $12.6 billion to $346.6 billion in Q1

Mumbai: The country's international investment position (IIP) has deteriorated during the June quarter as net claims of non-residents rose USD 12.6 billion to USD 346.6 billion following a sharper rise in the value of foreign-owned assets in the country vis-a-vis rise in the value of residents' financial assets abroad.

"Net claims of non-residents on the country, as reflected by the net IIP, rose USD 12.6 billion to USD 346.6 billion at the end of the June quarter from the previous quarter," the Reserve Bank has said. This change in the net position shows a USD 22.9 billion increase in the value of foreign-owned assets in the country vis-a-vis a USD 10.4 billion increase in the value of residents' financial assets abroad, the RBI said.

However, the ratio of the country's international financial assets to international financial liabilities improved to 58.7 per cent in the June quarter from 59.1 per cent in the March quarter. On an annual basis, the numbers deteriorated much faster as net IIP in June 2013 quarter stood at USD 313.4 billion, an increase of USD33.2 billion.

In the September quarter of FY14, net IIP had stood at a USD 302.7 billion while the same was USD 318.8 billion in the December 2013 quarter. Similarly, residents' financial assets abroad, too, rose USD 10.4 billion in Q1 to USD 492.8 billion from USD 482.4 billion in Q4 of FY14. On an annual basis, assets rose by USD 58.3 billion from USD 434.5 billion.

This stood at USD 436.7 billion in Q2 of FY14 and at USD 458.9 billion in Q3 of FY14. As per the RBI data, deterioration in net IIP was due to a sharper spike in the value of foreign-owned assets in the country vis-a-vis the increase in the value of residents' financial assets abroad. The net IIP measured as financial assets of residents are claims on non-residents and gold/bullion held as reserve assets less financial liabilities of the residents to non-residents.

The IIP shows the value and the composition of the financial assets of residents that are claims on non-residents, and gold/bullion held as reserve assets; and the liabilities of residents to non-residents. On the composition of external financial assets and liabilities, RBI said the reserve assets continued to have the dominant share of 64.2 per cent in the overseas financial assets, followed by direct investment abroad at 26.2 per cent.

The share of direct investment stood at 29.8 per cent, portfolio investment at 24.3 per cent, loans at 21.5 per cent, and currency and deposits at 12.7 per cent. The share of non-debt liabilities rose marginally to 46 percent in Q1 from 45.5 per cent in the previous quarter.