India owes foreigners over $65 b : RBI

Figures of net claims of NRIs in terms of annual comparison up

The Reserve Bank on Wednesday released the data on International Investment Position (IIP) as at the end of March  ‘09 providing details of the external financial assets and liabilities of the country in a statement.

The net international investment position (the stock of external financial assets less the stock of external financial liabilities) is the difference between what an economy owns in relation to what it owes. In this case the Indian economy owes more than what it owns.

“Net claim of non-residents on India as reflected by the net IIP (international assets - international liabilities) ... declined by $13.2 billion to $65.3 billion from $78.5 billion as at end-December 2008,” the RBI said.

However, in terms of annual comparison, the net claim of non-residents on India as at end-March ‘09 increased by 23.6 per cent to $ 65.3 billion from $ 52.9 billion as at end-March ‘08, the bank said.

“The ratio of net IIP of India to GDP (gross domestic product at current market prices) was (-) 6.3 per cent as at end-March 2009 as compared with (-) 4.5 per cent as at end-March 2008,” the RBI said. The reserve assets at $ 251.9 billion as at end-March ‘09 exceeded the entire external debt of $ 229.9 billion by $ 22 billion.

The share of reserve assets in the total external financial assets fell to 72 per cent as at end-March ‘09 from 74.9 per cent as at end-December ‘08, leaving higher share for direct and other investments. 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. Shortage of equity and long-term funds continue to halt the growth of small and medium enterprises in the country, RBI  Deputy Governor Usha Thorat said.

In its quarterly review of the annual monetary policy later this month, the apex bank is widely expected to announce a slew of supportive measures for the fund-starved sectors such as SMEs. This may include extension of the restructuring facility till December, relaxation in the NPA norms in infrastructure lending and provisioning requirements in certain segments. 

Noting that crisis in the global financial sectors has impacted the business of Indian companies as well, Thorat said banks need to be given time to restructure their loans given the current scenario.  In a meeting with the apex bank, bankers had asked for then extension of the restructuring facility to December 30 against the earlier deadline of June.

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