INDIA’S net international investment position has improved significantly in 2007-08 following liberalisation in norms of foreign investment by the domestic companies, residents and mutual funds. The net international liabilities has declined by a huge Rs 57,621 crore in 2007-08 from Rs 2,70,053 crore in 2006-07 to Rs 2,12,432 crore. The ratio of net international liabilities to gross domestic product as a result, has improved from -6.5% in 2006-07 to -4.5% in 2007-08.In five years, between 2002-03 and 2007-08, total international assets of India has increased at an annual compound rate of 27.4. Total international assets have increased 42.3% last year.
In 2007-08 alone the direct investment outflows increased by Rs 56,485 crore or 44% over 2006-07. The share of direct investment in total international assets has doubled during this period from about 6% in 2002-03 to 12% last year. In contrast, direct investment inflows to India has increased by about three times from Rs 1,48,440 in 2002-03 crore to Rs 4,61,886 crore in 2007-08.
But if India’s direct investment abroad has been increasing at a higher rate than inflows, the gap between inflows and outflows of portfolio investment has been widening rapidly over the years. Not surprising. For, the recent spurt in stock prices has made Indian bourses most sought-after investment destinations.
Total inflow of portfolio investment has increased more than three times during last five years from Rs 1,53,884 crore in 2002-03 to Rs 4,77,615 crore in 2007-08. Investment in equity securities which accounts for more than four-fifths of the total portfolio investment has gone up five times during this period from Rs 95,508 crore to Rs 3,92,966 crore. It has increased by a huge 1,17,154 crore or 42% in 2007-08 alone following a rapid surge in stock prices in Indian bourses — BSE sensex increased by about 26% between the first and last trading sessions of 2007-08.
Source: The Economic Times
Pix Source: The Economic Times
Contributed By:
Prof. Amit Dey
(Globsyn Business School)
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