Financial Daily from THE HINDU group of publications
Wednesday, Oct 01, 2003
Financial Daily from THE HINDU group of publications Wednesday, Oct 01, 2003 |
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Industry & Economy
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Economy Net foreign liabilities decline $20 b Our Bureau
Mumbai , Sept. 30 THE net foreign liabilities of the country have come down by $20 billion over the past five years. According to the data on `India's international investment position' released by the Reserve Bank of India today, the net foreign liabilities have fallen from $81.1 billion as on March 1997 to $60.1 billion as on March 2003. As a percentage of GDP, net foreign liabilities have fallen from 23.41 per cent to 12.76 per cent. International investment position represents the stocks of external liabilities as at the end of a specified period. According to the RBI, the decline in foreign liabilities was mainly due to build up of foreign exchange assets that have gone up from $22.4 billion to $71.9 billion during the period. The loan liabilities of the Government sector in dollar terms have fallen from $47.6 billion as on March 1997 to $42.7 billion as on March 2003, approximately a fall of 10.3 per cent. The gross foreign liabilities of the country have increased by $12.3 billion during 2002-03. This is mainly on account of increase in foreign direct investment stocks by $5.4 billion, rise in portfolio investment stocks in equity by $1.5 billion, increase in short-term trade credit availed by the corporate sector by $0.8 billion and increase in banking sector liabilities in the form of non-resident repatriable deposits to the tune of $7 billion including transfer of NRNR and NRE deposits on maturity. The corporate sector debt securities liabilities in the form of foreign currency convertible bonds (FCCBs) and ECB liabilities also declined by $1 billion and $1.5 billion respectively. According to the RBI, the changes in the composition of assets and liabilities of the Indian economy strongly indicate the increasing strength of the economy as reflected in the substantial improvement in its international investment position. Emerging composition of assets held abroad and foreign liabilities incurred by various sectors of the economy possibly reflects the fact that international market conditions vis-à-vis domestic market conditions are becoming important determinants of asset liability management related decision-making process of banks and corporates. This is also an indication of an increased integration of the Indian economy with the rest of the world, the RBI said in a press release.
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