India Attracts $38 Billion Overseas Investment In Quarter To March
India has attracted $37.8 billion foreign investment the last leg of United Progressive Alliance government between January and March as investors pumped in dollars in anticipation of a stable government. The strong dollar inflows through the portfolio route has also helped the local currency to appreciate and contribute to the rise.
Data released by Reserve Bank of India showed that $16.1 billion came in as foreign direct investment during that period while another $13.4 billion came in as portfolio investment, taking the total foreign-owned assets in India to $814.8 billion.
Among other investment liabilities, loans (mainly external commercial borrowings) grew by $7.5 billion.
About 30% of India’s international liabilities is on account of direct investment while portfolio investment contributed 23.7% of it, followed by loans (21.9%) and currency and deposits (12.8%) and so on.
The rise in India’s international liabilities also reflects the change in variation in exchange rate of rupee vis-a-vis dollar and euro. RBI said that the country’s equity liabilities grew by $23.4 billion to $371.4 billion in March 2014, partly due to the stock valuation effect resulting from rupee appreciation, while net inflow was $12.6 billion during the period.
International financial assets abroad increased by $35.4 billion on a year-on-year basis. Over 70% of it ($24.9 billion) has been contributed by Indian residents.
Indians have directly invested $9.2 billion in equities of foreign ventures and another $12.1 billion in reserve assets. The ratio of total international financial assets to GDP (at current market prices) increased to 25.6% as at end-March 2014 from 24.1% per cent a year ago.
As a result of the changes in external assets and liabilities, net claims of non-residents on India increased by $4.9 billion as at end-March 2014.
The ratio of India’s international financial assets to international financial liabilities stood at 59.3% in March 2014 as compared with 59% in December 2013.