Fact box : International Investment Position (IIP)

April 5, 2013

India’s International Financial Liabilities increased by US $10.5 bn
As per RBI: India’s international financial liabilities rose by $10.5 billion to $723.9 billion in the 3rd quarter of the current fiscal.
India’s International Investment Position
a) International Financial Liablities = $723.9 bn
b) Indian resident’s financial assets abroad = $441.9 bn
c) Net claim of non-residents on India = $282 bn ( = a – b)
Thus, the difference between international financial assets and liabilities reflecting the India’s international investment position increased by $10.4 billion to $282 billion.
The key constituents of India’s financial liabilities were:

Direct investment (with share of 31.3 %)
Portfolio investment (23.4 %)
Loans (mainly External Commercial Borrowings) (22.9 %) .

What is International Investment Position (IIP) ?

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.

What is net IIP ?

The difference between an economy’s external financial assets and liabilities is its net IIP, which may be positive or negative.

What is the purpose / importance of such a balance sheet analysis of International accounts of a country?

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.

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