Net claims of non-residents on India declined by $6.4 billion during Q4FY24 to $361.7 billion as at end-March 2024, as per India’s International Investment Position (IIP) data released by the Reserve Bank of India (RBI) on Tuesday.
Indian residents’ overseas financial assets recorded higher rise ($38.1 billion) as compared with that in the foreign-owned assets in India ($31.7 billion), which led to the decline in net claims of non-residents during the quarter, the RBI said.
The rise in India’s foreign liabilities was attributed to higher inward direct investments, portfolio investments, loans as well as currency and deposits taken by resident entities even as trade credits recorded a marginal decline, it added.
Increase in the reserve assets ($23.9 billion) was the dominant component of the rise in Indian residents’ overseas financial assets during January-March 2024, followed by currency and deposits, and overseas direct investments.
On an outstanding basis, reserve assets accounted for 62.9% of India’s international financial assets in March 2024, as per RBI data. The ratio of India’s international assets to international liabilities improved to 74% in March 2024 from 72.9% a quarter ago.
The share of debt liabilities in total external liabilities increased marginally during the quarter and stood at 51.1% in March 2024, as per the released data.
IIP during April-March 2023-24
During FY24, the net claims of non-residents declined by $5.5 billion on the back of higher rise in India’s external financial assets (U.S. $109.8 billion) vis-à-vis external financial liabilities (U.S. $104.3 billion).
Reserve assets accounted for 62% of the increase in total overseas financial assets of residents: currency and deposits, and overseas direct investments were other major components.
Inward portfolio and direct investments as well as loans accounted for over three-fourths of the rise in foreign liabilities during the year.
Variation in the exchange rate of rupee vis-a-vis other currencies impacted the change in liabilities, when valued in U.S. dollar terms, the RBI said. The ratio of India’s international financial assets to international financial liabilities increased to 74% in March 2024 from 71.4% a year ago. As a ratio to GDP (at current market prices), India’s reserve assets and residents’ overseas financial assets as well as liabilities increased during FY24. The ratio of net claims of non-residents on India to GDP improved to (-)10.3a% in March 2024 from (-)11.3% a year ago, and (-)11.6 % two years ago.
